The Morning Call
1/4/21
The
Market
Technical
The
S&P continues its move to higher ground, remaining in uptrends across all
timeframes, even in the very short term.
As long as this kind of momentum exists, there is really nothing to do
but sit back and enjoy. That said, given
the current level of valuations and uncertain economic outlook, I am not feeling
complacent. The higher prices go, the
more vigilant I will be.
The
long bond completed a successful challenge of the downtrend off its August
high. A plus to be sure; but it still
remains in a short term trading range and below both DMA’s. A continued move to the upside would suggest
that investors are increasingly convinced that inflation will not be a problem
and/or the economy is slowing.
On
Thursday, gold appeared to be following the move in TLT, beginning a challenge
of the downtrend off its August high as well as its 100 DMA. The problem is that a move higher in GLD
implies the opposite of a move higher in TLT; to wit, that investors are growing
more confident in a rise in inflation.
On
the other hand, the decline in the dollar has shown no signs of abetting,
suggesting the investors has not altered their concern about higher inflation.
https://www.zerohedge.com/geopolitical/decline-fall-dollar-hegemony
So,
investors have a mix and match problem.
Do they believe stocks and bonds or gold and the dollar? There is no consistent theme being reflected
in the pin action of these four indices.
My takeaway is that since there is considerable disagreement among
various types of investors and I am not smart enough to know who is right, caution
is a virtue.
2020
in the charts.
https://www.zerohedge.com/markets/2020-12-stunning-charts
Is there a January effect?
Fundamental
Headlines
The
Economy
Review
Week of 12/14
Overall, the stats
in the US were negative, but the primary indicators that were positive
outnumbered the negative three to one.
I’ll score it as a slight plus.
Overseas, the
indicators were again very positive---for a fourth week in a row----again
bringing hope of global economic improvement..
Week of
12/21
In the US, the
stats were negative and the primary indicators were abysmal (one positive,
three negative)---a turnaround from the prior week.
Overseas, the
numbers were a bit skimpy. But that
said, they continued their positive trend,
Week of
12/28
Talk about
skimpy. They were almost nonexistent. What there was, was balanced in the US and
negative overseas.
In sum, both
the US and global economies continue to grudgingly improve but certainly not in
a ‘V’ shaped recovery. Perhaps more in line
with a ‘K’ or Nike swoosh pattern.
Whatever the
shape or magnitude of the near term bounce back, I am not altering my belief
that long term the economy will grow at a historically subpar secular rate due
to the twin burdens of egregiously irresponsible fiscal and monetary
policies---which, by the way, are becoming even more egregiously irresponsible
as a result of measures being taken by the government and the Fed in dealing
with the current crisis.
https://www.zerohedge.com/economics/time-not-different-more-debt-less-growth
US
International
November UK
mortgage approvals were 105,000 versus estimates of 82,500.
The December
German final manufacturing PMI came in at 58.3 versus consensus of 58.6; the EU final PMI was 55.2 versus 55.5;
the final UK PMI was 57.5 versus 57.3.
Other
Does an extra $2,000/person pandemic relief
make good economic sense?
US housing enters massive bubble.
https://www.zerohedge.com/markets/us-housing-enters-2021-massive-bubble
The coronavirus
New wave of lockdowns in EU.
https://www.zerohedge.com/covid-19/germany-leads-europe-new-wave-lockdowns-covid-numbers-surge
There is plenty of blame to go around.
China
Analysis of Xi’s latest economic speech.
News on Stocks in Our Portfolios
Johnson & Johnson (NYSE:JNJ) declares
$1.01/share quarterly dividend, in line
with previous.
What
I am reading today
Archeologists
find ancient food shop in Pompeii.
The
unintended consequences of giving bureaucrats too much power..
https://johnhcochrane.blogspot.com/2020/12/unintended-consequences.html
Review
your credit profile.
https://alephblog.com/2020/12/29/review-your-credit-profile/
Quote
of the day.
Quotation
of the Day... - Cafe Hayek
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