The Morning Call--Eventually, you have to stop digging

 

The Morning Call

 

10/13/20

 

The Market

         

    Technical

                         

            Will the election be Y2K 2.0?

            http://www.athrasher.com/will-the-election-turn-out-to-be-y2k-2-0/

 

            Gold and the Golden Constant.

            https://www.tandfonline.com/doi/figure/10.1080/0015198X.2020.1817698?scroll=top&needAccess=true

 

            Everyone is back in the pool.

            https://www.zerohedge.com/markets/extreme-positioning-everyones-back-pool

 

            Monday in the charts.

            https://www.zerohedge.com/markets/mega-tech-melt-sparks-stocks-best-day-6-months

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

September CPI came in at +0.2%, in line; core CPI was also 0.2%, also in line.

                          https://www.zerohedge.com/economics/used-car-prices-soar-shelterrent-costs-slow-september-cpi-data

 

                        International

 

August UK unemployment  was 4.5% versus predictions of 4.3%; average earnings were flat versus -0.6%; Q2 labor productivity was -2.0% versus -2.5%

 

The September Chinese trade balance was $37 billion versus estimates of $58 billion,

 

September German CPI was -0.2%, in line; October economic sentiment was 56.1 versus forecasts of 73.0.

 

October EU economic sentiment was 52.3 versus expectations of 60.0.

 

         

                              

 

                        Other

 

                          Latest nowcasts.

                          http://econbrowser.com/archives/2020/10/nowcasts-compared

 

                          Update on seven high frequency indicators.

                          https://www.calculatedriskblog.com/2020/10/seven-high-frequency-indicators-for_12.html

 

                          The tale of two economies.

                           http://blog.yardeni.com/2020/10/tale-of-two-economies-housing-related.html

 

                                  Compare and contrast with the above article.

                          https://www.nytimes.com/2020/10/10/business/European-economy-coronavirus.html

 

                Fiscal Policy

 

              More debt is not the answer.

              https://www.zerohedge.com/economics/no-europe-more-debt-not-answer

 

            The coronavirus

 

              Latest US stats.

              http://econbrowser.com/archives/2020/10/for-the-record

 

              Johnson and Johnson halts vaccine trial.

              https://www.zerohedge.com/geopolitical/johnson-johnson-latest-halt-covid-19-vaccine-trial-over-unspecified-illness

 

              Where is the compassion?

              https://www.americanthinker.com/blog/2020/10/where_is_compassion_for_the_millions_who_have_suffered_harm_from_lockdowns.html

 

            Bottom line.  As you know, the primary thesis of my long term secular economic growth forecast (and hence, the E in P/E) is that more government debt and more QEInfinity/Forever inhibit rather than stimulate future economic growth.  This article from Lance Roberts provides the statistical backup for this thesis. 

 

‘The “COVID-19″ crisis led to a debt surge to new highs. Such will result in a retardation of economic growth to 1.5% or less, as recently. Simultaneously, the stock market may rise due to massive Fed liquidity, but only the 10% of the population owning 88% of the market benefits. In the future, the economic bifurcation will deepen to the point where 5% of the population owns virtually all of it.

As I noted previously, it now requires $7.42 of debt to create $1 of economic growth, which will only worsen as the debt continues to expand at the expense of more robust rates of growth.’

            https://www.advisorperspectives.com/commentaries/2020/10/12/more-stimulus-and-the-2nd-derivative-effect

 

              For the bulls: four exaggerated concerns.

              https://blog.evergreengavekal.com/four-exaggerated-concerns/

 

              Q 3 earnings preview.

              https://www.zerohedge.com/markets/q3-earnings-preview-its-faamgs-vs-everyone-else

 

    News on Stocks in Our Portfolios

 

BlackRock (NYSE:BLK): Q3 Non-GAAP EPS of $9.22 beats by $1.46; GAAP EPS of $8.87 beats by $1.07.

Revenue of $4.37B (+18.4% Y/Y) beats by $480M.

 

Johnson & Johnson (NYSE:JNJ): Q3 Non-GAAP EPS of $2.20 beats by $0.22; GAAP EPS of $1.33 misses by $0.37.

Revenue of $21.08B (+1.7% Y/Y) beats by $930M.

 

Fastenal (NASDAQ:FAST): Q3 GAAP EPS of $0.38 beats by $0.01.

Revenue of $1.41B (+2.2% Y/Y) beats by $10M.

 

 

Fastenal (NASDAQ:FAST) declares $0.35/share quarterly dividend, in line with previous.

 

Williams-Sonoma (NYSE:WSM) declares $0.53/share quarterly dividend, 10.4% increase from prior dividend of $0.48.

 

What I am reading today

 

            None of the above.

            https://alephblog.com/2020/10/08/nota-bene-redux/

 

            Making friends with discomfort.

            http://traderfeed.blogspot.com/2020/10/making-friends-with-discomfort.html

 

 

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