Wednesday, November 18, 2020

The Morning Call--So far, so good


The Morning Call




The Market




Tuesday in the charts.  The most important detail is that while the Dow and S&P sold off, they remained above their all-time highs for a second day.  If they remain there through the close on Thursday, the challenge will be successful (accordingly to my time and distance discipline).  On the other hand, bonds, the dollar and gold still aren’t buying the optimism.


            No variable exists in a vacuum.



            Too much of a good thing.







              The Economy




Weekly mortgage applications fell 0.3% but purchase applications increased 3.5%.


                          Month to date retail chain store sales growth improved over the prior week.


                          October industrial production rose 1.1% versus expectations of +1.0%.


October housing starts were up 4.9% versus predictions of no change; building permits were unchanged versus +0.1%.


The November housing market index came in at 90 versus consensus of 85.





The October Japanese trade balance was Y872.9 billion versus estimates of Y250.0 billion.


October UK CPI was flat versus projections of -0.1%; core CPI was +0.2% versus 0.0%; PPI was 0.0% versus +0.1%.


October EU CPI was +0.2%, in line.




                          Update on big four economic indicators.



                          Underestimating inflation.



                        Soybeans near $12/bushel.




            The Fed


              The Fed put.  It’s real and it’s spectacular.



              As long as the music is playing, you have to dance.



              Powell says that we have a long way to go to recovery.



             Bottom line.  Time to reduce risk.



             Yield hunters have three options.



             Sector rotation in progress?



    News on Stocks in Our Portfolios


MSC Industrial Direct Co., Inc. (NYSE:MSM) declares $3.50/share special dividend.


What I am reading today


            Forgiving student debt is a dumb idea.


            Bitcoin is gunning for a record and no one is talking about it.



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