Thursday, November 12, 2020

The Morning Call---The vaccine may not cure the ills of the economy but it could help the Market

The Morning Call




The Market




            Could the bond market derail the stock market?



            Wednesday in the charts.  The important takeaways being (1) the Dow and S&P remain below their all-time highs [danger!! triple top] and (2) the bond market was closed.







              The Economy




                          Weekly jobless claims rose 709,000 versus estimates of 735,000.


October CPI came in unchanged versus predictions of +0.1%; core CPI was also flat versus +0.2%.




September EU industrial production fell 0.4% versus expectations of +0.7%.


September Japanese machinery orders declined 4.4% versus consensus of -0.7%; October PPI was -0.2%, in line.


The September UK trade balance was +L0.6 billion versus projections of -L1.0 billion; industrial production was up 0.5% versus +0.8%; manufacturing production was +0.2% versus +1.0%; GDP was -8.4%, in line.


Q3 UK preliminary GDP growth rate was 15.5% versus forecasts of 15.8%; business investments were up 8.8% versus +15.9%; construction output was +0.6% versus -20.0%.


October German CPI was unchanged, in line.




            The Fed


              Vaccine news means central banks will have to disappoint.



            The coronavirus


              ***overnight update.



                            Is a lockdown coming?



                  And with it, ‘distributive justice’?



I am making an economic not a political observation here---a lockdown and a longer inoculation period for the coronavirus vaccine will almost surely negatively economic growth at least for the period of the lockdown.


              It was a mistake to close schools.



                Bottom line.  There is no vaccine for a terminally ill economy.



While the author of the above very bearish piece makes good textbook points on the economy, we are invested in the Market not the economy.  And it has yet to be proved that QE is bad for stocks.  Until it is, this Market will retain its upward bias---though that triple top I keep mentioning would be an early warning signal.


    News on Stocks in Our Portfolios


Automatic Data Processing (NASDAQ:ADP) declares $0.93/share quarterly dividend, 2.2% increase from prior dividend of $0.91.


What I am reading today


            Save first, spend what is left.



            If everything is historic then nothing is historic.



            How the income gap got so wide.



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