The Morning Call
2/16/21
The
Market
Technical
The S&P
continues its relentless advance. Technically,
everything is coming up roses supported by a criminally easy monetary policy
(endorsed not once but twice last week by Powell) and an equally irresponsible
fiscal policy. While valuations continue
to reach historical extremes, I can’t see an end to this uptrend as long as the
money keeps flowing with abundance and in the absence of any major negative exogenous
event.
TLT made a new
eleven month low on Friday. The next visible
support is the green line which is another seven points down and represents
only weak support. Worse the long bond
can decline much further before serious technical damage will be done. So, the $64,000 question is, how much of that
can take place before the equity guys freak (i.e., would it become the major
negative exogenous event)?
And.
https://www.zerohedge.com/the-market-ear/cjn3bposqy
Last week, GLD
filled those two gap down opens from the previous week but failed to successfully
challenge its 200 DMA (now resistance) and remained within the downtrend off last
August’s high. Technically speaking, that
removes any reason to hope for a break in its current downtrend; and as I noted
last week, gold’s next visible support is the lower boundary of its very short
term uptrend and that is almost 20 points lower.
The dollar fell
back last week but managed to remain above its former downtrend’s upper boundary,
suggesting that the worst may be over at least short term. Even on the assumption that UUP had made a
bottom, it has a struggle ahead to affect any follow through to the upside.
Friday
in the charts.
https://www.zerohedge.com/markets/bonds-dollar-dumped-black-gold-bitcoin-pumped
Bottom line. Money talks.
Fundamental
Headlines
The
Economy
Review of the Week
There was a
paucity of data last week both here and abroad.
In the US, the stats were slightly weighed to the negative with no
primary indicators reported. But I am
going to count this a neutral with no implications regarding trend.
Overseas, the
stats were also slightly negative. But
again, I see nothing that is directionally important.
For the moment, our
base economic scenario remains intact---the US and global economies are
improving but not at the velocity of the initial sharp rebound off the bottom. In other words, a diminishing probability of
a ‘V’ shaped recovery which would lessen any potential inflationary pressures
and leave the Fed free to continue QEInfinity.
Longer term, my
belief is that the economy will grow at a historically subpar secular rate due
to the twin burdens of egregiously irresponsible fiscal and monetary
policies---which continue to become even more egregiously irresponsible as a
result of measures being taken by the government and the Fed in dealing with
the current crisis.
US
The February NY Fed manufacturing index came
in at 12.1 versus estimates of 6.0.
International
Preliminary Q4
Japanese GDP growth was +3.0% versus forecasts of +2.3%; capital expenditures were up 4.5%
versus +2.6%; private consumption was up 2.2% versus +1.8%; December industrial
production fell 1.0% versus -1.6%.
Preliminary Q4 EU
GDP growth was -0.6% versus expectations of -0.7%;
the December trade
balance was +E29.2 billion versus expectations of +E25.3 billion; December industrial
production declined 1.6% versus -1.0%; February economic sentiment was 69.6
versus 57.0.
February German
economic sentiment was 71.2 versus consensus of 59.6.
Other
Seven high frequency economic indicators.
https://www.calculatedriskblog.com/2021/02/seven-high-frequency-indicators-for_15.html
The
Fed
Powell is wrong.
https://www.zerohedge.com/economics/powell-wrong-more-stimulus-wont-create-employment
The
coronavirus
How to make the vaccine more effective.
Light at the end of the tunnel?
https://www.zerohedge.com/covid-19/one-year-later-light-end-pandemic-tunnel
Bottom line.
JP Morgan calling for big short squeeze in
oil.
https://www.zerohedge.com/commodities/jpmorgan-predicts-biggest-short-squeeze-yet-begins-next-month
The latest from John Mauldin.
https://www.advisorperspectives.com/commentaries/2021/02/12/overstimulation-risk
The ten biggest money mistakes.
https://ofdollarsanddata.com/biggest-money-mistakes/
News on Stocks in Our Portfolios
Illinois Tool Works (NYSE:ITW) declares $1.14/share
quarterly dividend, in line with previous.
FedEx (NYSE:FDX) declares $0.65/share
quarterly dividend, in line with previous.
Genuine Parts (NYSE:GPC) declares $0.815/share
quarterly dividend,3.2% increase from prior dividend of $0.790.
CVS Health (NYSE:CVS): Q4 Non-GAAP EPS of $1.30 beats by $0.06; GAAP EPS
of $0.75 misses by $0.11.
Revenue
of $69.55B (+4.0% Y/Y) beats by $800M.
What
I am reading today
Will
working longer save your retirement?
https://www.marketwatch.com/story/will-working-longer-save-your-retirement-11613147391?mod=home-page
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