Thursday, November 19, 2020

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

 

The Morning Call

 

11/19/20

 

The Market

         

    Technical

 

            Wednesday in the charts.

            https://www.zerohedge.com/markets/stocks-bonds-dollar-drop-vaccine-pop-flops

 

            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.

            https://www.zerohedge.com/markets/ugly-tailing-20y-auction-pushes-treasury-yields-session-high

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

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

                          https://www.zerohedge.com/personal-finance/initial-jobless-claims-re-accelerated-last-week-pandemic-claims-continue-soar

 

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

 

                        International

 

                        Other

 

                          Architecture billings stalled in October.

                          https://www.calculatedriskblog.com/2020/11/aia-architecture-billings-remained.html

 

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

                          http://scottgrannis.blogspot.com/2020/11/more-v-shaped-signs.html

 

                          Latest Q4 nowcast.

                          http://www.capitalspectator.com/relatively-moderate-growth-expected-for-us-gdp-in-q4/

 

            The Fed

 

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

              https://www.zerohedge.com/markets/dear-fed-stop-lying-low-rates-benefit-poor-people

 

            The coronavirus

 

              ***overnight update.

              https://www.zerohedge.com/geopolitical/astrazeneca-vaccine-elicits-strong-immune-response-older-adults-russian-covid-cases

 

              Lockdown lunacy.

              https://thehill.com/opinion/finance/526341-the-return-of-lockdown-lunacy

 

              Mask this.

              https://www.powerlineblog.com/archives/2020/11/mask-this.php

 

              Many companies that got PPP loans have gone bankrupt.

              https://www.zerohedge.com/markets/hundreds-companies-got-ppp-loans-have-gone-bankrupt

 

              Can mouthwash kill the coronavirus?

              https://dailycaller.com/2020/11/17/mouthwash-listerine-kills-coronavirus-laboratory-study/

 

            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.

              https://www.zerohedge.com/markets/jpm-sees-stock-surge-2021-trillions-unlocked-liqudity-flood-market

 

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

              https://www.zerohedge.com/markets/goldman-warns-massive-36bn-month-end-pension-selling-4th-largest-record

 

              An easier to use CAPE model.

              https://alphaarchitect.com/2020/11/16/a-cheap-and-easy-way-to-use-the-cape-ratio-to-predict-market-returns/

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

            What about tackling the causes of high student loan debt?

            https://www.nytimes.com/2020/11/18/upshot/student-debt-forgiveness-biden.html

 

            How business cycles are dated.

            https://www.nber.org/research/business-cycle-dating

 

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

            https://www.zerohedge.com/political/im-not-ruling-out-trump-re-election-jpm-am-cio-fears-remote-risk-american-horror-story

 

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