The Morning Call
10/7/20
The
Market
Technical
The Averages (27772, 33360) were headed higher on the day
only to get smashed following Trump’s instructions to republicans to halt
stimulus bill negotiations (after seeing the impact on the Market, he revised
his position saying he would entertain directed [like airline bailout] stimulus
legislation) and the release by the house dems accusing big tech of possessing
monopoly power.
https://www.zerohedge.com/technology/house-democrats-game-plan-breaking-big-tech-leaks
While both of the
indices held above their very short term trend of higher lows, the two gap up
opens down below remain---which, as you know, I believe will have to be filled.
I still believe that the Market’s long
term bias is to the upside and will remain so as long as investors buy into QEInfinity/Forever.
The
fear barometer is not showing much fear.
http://mrzepczynski.blogspot.com/2020/10/csfb-fear-barometer-why-is-fear-stable.html
Gold was off 1
1/8%, remaining within a short term trend of lower highs. TLT bounced
off its 200 DMA (now support) but continues to trade in a trend of lower highs.
The dollar was also up, rebounding off
the developing trend of higher lows. Clearly,
these indicators had no follow through to Monday’s dramatic performance,
leaving me with directional uncertainty and wondering what investors are trying
to discount.
Is the spike in yields
a sign of reflation?
http://www.capitalspectator.com/latest-rise-in-10-year-yield-stirs-reflation-forecasts-again/
Tuesday in the
charts.
https://www.zerohedge.com/markets/shart-deal-stocks-bond-yields-puke-trump-no-stimulus-tweet
Fundamental
Headlines
The
Economy
US
Weekly mortgage
applications rose 4.6% but purchase applications fell 1.5%.
The August job
openings (JOLTS) report showed available jobs at 6.5 million versus projections
of 6.7 million.
International
Preliminary
August Japanese leading economic indicators came in at 88.8 versus estimates of
88.0.
Other
WTO updates (lowers) its 2021 global trade forecast.
https://www.zerohedge.com/economics/wto-revises-global-trade-slump-forecast-sees-weaker-2021-rebound
Dry bulk shipping rates hit 2020 high.
https://www.zerohedge.com/commodities/dry-bulk-shipping-rates-hust-hit-new-2020-high
The Fed
I have repeatedly
focused on the negative consequences of the Fed’s QEInfinity/Forever policy, one
of which is increasing income inequality.
Here are two articles on the potential fallout if this issue is not
addressed.
Whatever comes
after Trump and Biden will be worse---a bit melodramatic but only a bit.
https://thereformedbroker.com/2020/10/05/whatever-comes-after-trump-and-biden-will-be-worse/
Mohamed El Erian’s
more circumspect take on the above issue.
In a speech to the
National Association of Business Economics, Powell argued for more fiscal
stimulus.
https://www.zerohedge.com/markets/watch-fed-chair-powell-ask-congress-more-fiscal-stimulus
That is not new news,
but it comes on a day that Trump shut down stimulus bill negotiations.
The
coronavirus
A curve ball is not an existential threat.
https://www.aier.org/article/a-curveball-isnt-an-existential-threat/
Restaurant spending almost back to
pre-coronavirus levels.
https://www.zerohedge.com/economics/us-restaurant-spending-almost-back-pre-covid-levels
Bottom
line. The stock market disconnect.
Finding opportunity beyond the megacaps.
News on Stocks in Our Portfolios
Paychex (NASDAQ:PAYX): FQ1
Non-GAAP EPS of $0.63 beats by $0.08; GAAP EPS of $0.59 beats
by $0.08.
Revenue
of $932.2M (-6.0% Y/Y) beats by $43.93M.
What
I am reading today
National
Geographic’s best photos of the decade.
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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