Wednesday, November 4, 2020

The Morning Call--Gridlock the optimum scenario


The Morning Call




The Market




            Tuesday in the charts.







              The Economy




Weekly mortgage applications were up 3.8% but purchase applications were down 1.3%.


                          Month to date retail chain store sales grew faster than in the prior week.


September factory orders rose 1.1% versus estimates of 1.0%; ex transportation, there were up 0.5% versus 1.0%.


The September trade balance was -$63.9 billion versus expectations of -$63.8 billion.


The October ADP private payroll report showed job increases of 365,000 versus predictions of 650,000.




The final October Chinese Caixin services PMI came in at 56.8 versus consensus of 54.0; the German services PMI was 49.5 versus 48.9; the EU services PMI was 46.9 versus 46.2; the UK services PMI was 51.4 versus 52.3.


The final October Chinese Caixin composite PMI was 55.7 versus forecasts of 54.0; the German composite PMI was 55.0 versus 54.5; the EU composite PMI was 50.0 versus 49.9; the UK composite PMI was 52.1 versus 52.9.




                          Stagflation will be the challenge in 2021.



                          Global manufacturing output accelerated in October.



                          Early Q4 GDP forecasts.



            Fiscal Policy


              The national debt matters.



            The Election


              As you know, I do my best to stay out of politics.  But since this is election time, I thought that I would pass on comments from the big boys (below) about what happens next---with the caveat that no one has a clue.  I will observe that the Mr. Market seems to have been saying that either this will be an uncontested election (which isn’t happening) and that whoever wins, it will be a positive for equities or that we will end up with a divided government (which appears more likely). 


  As you know, my preferred scenario is always gridlock because it decreases the odds of the ruling class doing anything stupid (which is its tendency) that would mess with my (and your) life.  So, whoever becomes president, if the GOP retains the senate, I, and apparently the Market, will be satisfied.


However, the real positive for the Market, as Ed Yardini opines below is that whatever the result of the election, all will be well because the Fed is there with its hand on monetary pump ready to rescue the economy, the Market, the world, the universe, Goldilocks, Little Orphan Annie, the Dallas Cowboys and anyone else that needs help. 


That said, please pay attention to the endless documentation that I present on valuations.


              Gridlock and the Fed.



              How the ‘big boys’ are election proofing their assets.



              Rules to navigate a contentious election.



              They can’t help you.



              JP Morgan’s opinion.



              Random election day thoughts.



            The coronavirus

              Sweden: still a beacon of light.



            Bottom line.  Beware of the regression to trend.



                          More on valuations.



              Corporate insiders not buying.



              Dividends by the number in October.



    News on Stocks in Our Portfolios


              Emerson Electric (NYSE:EMR) declares $0.505/share quarterly dividend, 1% increase from prior dividend of $0.500.


What I am reading today




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