Thursday, November 19, 2020

The Morning Call---Long term, it is still about the Fed---until it is not.


The Morning Call




The Market




            Wednesday in the charts.



            The Averages fell back below their former all-time highs, thus failing to confirm the break above those levels.  The question before us is whether this signifies the possible development of a triple (quadruple?) top or just part of the struggle to surmount a major resistance level.  As always, follow through remains important but is even more so in the current circumstance, given they are at a critical technical level.  Bonds, the dollar and gold remain unimpressed with the volatility in equities.


            Ugly 20 year Treasury auction pushes yields higher.







              The Economy




                          Weekly jobless claims rose 742,000 versus estimates of 707,000.



The November Philadelphia Fed manufacturing index came in at 26.3 versus consensus of 22.0






                          Architecture billings stalled in October.



                          From my favorite optimist, but not very convincing:  More signs of a ‘V’                           economy.



                          Latest Q4 nowcast.



            The Fed


              Dear Mr. Powell, low rates do not benefit the poor.



            The coronavirus


              ***overnight update.



              Lockdown lunacy.



              Mask this.



              Many companies that got PPP loans have gone bankrupt.



              Can mouthwash kill the coronavirus?



            Bottom line.  Despite the technical turmoil around the Averages all-time highs, as JP Morgan points out, QE is still alive and well.  I continue to believe that this factor will keep the Market’s bias to the upside, at least in the long term.


  JP Morgan sees equities spiking in  2021 on liquidity surge.



In the meantime, Goldman sees $35 billion in selling as pension funds rebalance at month end.



              An easier to use CAPE model.



    News on Stocks in Our Portfolios




What I am reading today


            What about tackling the causes of high student loan debt?



            How business cycles are dated.



            What it would take for Trump to win (it’s a lot).



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