The Morning Call
12/3/20
The
Market
Technical
Wednesday in the charts. As stocks continue to rise, the long bond fell
(if it closes below the lower boundary of its very short term uptrend today,
that trend will be negated) as well as the dollar (if it closes below the lower
boundary of its short term trading range today, it will reset to a downtrend;
if it closes below the lower boundary of its intermediate term uptrend on
Friday, it will reset to a trading range)---all signs that investors believe
the economy is improving.
https://www.zerohedge.com/markets/jobs-flop-gold-pops-bonds-dollar-drop
Rising yields
(lower bond prices) impact on other markets.
Historically, when
yields gradually rise off a low, that has been a sign of an improving economy
which in turn has been good for equities.
However, when the rate of increase begins to accelerate or if the initial
move is a spike versus a gradual increase that has been an indication mounting of
inflation worries which has not been good for stocks. The point here is to watch the rate of price
decline (yield rise) as a harbinger of stock market direction.
Currently, the percentage of stocks
outperforming the S&P is the lowest since 1999.
https://www.ft.com/content/1e5c9f52-ffba-4c2c-9bea-4cc415b16feb
And momentum is
weakening.
https://www.zerohedge.com/markets/mystery
Fundamental
Headlines
The
Economy
US
Weekly jobless claims rose 712,000 versus
predictions of 775,000.
November light vehicle
sales came at 15.5 million versus forecasts of 16.2 million.
https://www.calculatedriskblog.com/2020/12/november-vehicles-sales-decreased-to.html
The Fed released its latest Beige Book report
which contain no surprises. The slightly good news is that the economy and
employment continue to recover. The slightly
bad news is that four districts reported a falloff in growth beginning in early
November.
International
October EU retail sales rose 1.5% versus
projections of +0.8%.
The November final
Japanese services PMI came in at 47.8 versus consensus of 46.7; the Chinese
Caixin services PMI was 57.4 versus 56.4; the German services PMI was 46.0
versus 46.2; the EU services PMI was 41.7 versus 41.3; the UK services PMI
was47.6 versus 45.8.
The November final
Japanese composite PMI was 48.1 versus estimates of 47.0; the Chinese Caixin
composite PMI was 57.5 versus 55.4; the German composite PMI was 51.7 versus
52.0; the EU composite was 45.3 versus 45.1; the UK composite was 49.0 versus
47.4.
Other
Global manufacturing in November expanded at a
rapid rate.
https://www.markiteconomics.com/Public/Home/PressRelease/8b69fe1b43dc4595912567f3ec437ed0
Cyber Monday spending
hit record high.
https://www.zerohedge.com/markets/online-spending-hits-record-cyber-monday
OPEC makes headway
on production cut agreement.
The
coronavirus
***overnight update.
Common sense, science and nonscience.
https://www.adamsmith.org/blog/common-sense-science-and-nonscience
Bottom
line. Diversify, diversify, diversify.
https://www.mutualfundobserver.com/2020/12/preparing-for-a-new-world/#more-14850
Updated
valuation measures.
https://www.advisorperspectives.com/dshort/updates/2020/12/02/is-the-stock-market-cheap
News on Stocks in Our Portfolios
Kroger (NYSE:KR): Q3
Non-GAAP EPS of $0.71 beats by $0.05; GAAP EPS of $0.80 beats
by $0.16.
Revenue of $29.72B (+6.3% Y/Y) misses by $310M.
Donaldson (NYSE:DCI):
FQ1 GAAP EPS of $0.48 beats by $0.04.
Revenue of $636.6M
(-5.4% Y/Y) beats by $21.4M.
General Dynamics (NYSE:GD) declares
$1.10/share quarterly dividend, in line with previous.
Microsoft (NASDAQ:MSFT) declares
$0.56/share quarterly dividend, in line with previous.
What
I am reading today
Are you overinvested in
stocks? The problem with this analysis
is that if you up your exposure to bonds, in particular long dated maturities,
you are also assuming a good deal of capital risk with no commensurate yield
advantage. In other words, long bond
yields are currently quite low. If
stocks decline, one of the contributing causes will likely be rising yields
(lower bond prices). So, which would you
rather own today if they both go down in price tomorrow? ATT yielding 7% or a long bond yielding 2%
This 1000 year old Japanese business
knows something about surviving a crisis.
https://www.nytimes.com/2020/12/02/business/japan-old-companies.html
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment