The Morning Call
3/29/21
The
Market
Technical
The S&P started
last week on its back foot but ended it
on a very positive note. Still, it (1) has
not regained the lower boundary of its former short term uptrend and (2) has not made a new high. But certainly, that finish is promising. Plus, it has plenty of support from both DMA
before it mounts a challenge of any other trend lines. As I said last week, the S&P recent
performance is more of a loss of upside momentum than a warning bell that more
downside is in the offing. My Market
assumption remains: ‘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.’
Is a massive fund
liquidating stocks?
https://www.zerohedge.com/markets/massive-fund-liquidating-stocks
The risk appetite
is soaring.
https://www.zerohedge.com/the-market-ear/ckmi9jwd09
Markets rally on
Powell’s easy money promise.
The long bond’s
performance last week was the mirror image of the S&P’s---starting the week
on a positive note but falling on Thursday and Friday. The good news is that
the lower boundary of its short term trading range is holding. The bad news is that if it doesn’t, there is
considerably more downside before it reaches support. I continue to believe that its current price
performance is and will be reflective of investor bets on inflation.
GLD remains in a
downtrend off its all-time high. But as I
have noted, gold was so extended to the upside, its current retreat has not
even broken its very short term uptrend.
Hence, further weakness seems reasonable especially with interest rates
and the dollar rising.
The dollar continues
its slow recovery and is poised to challenge its 200 DMA. This progress is likely a function of the US
being well ahead of most of the world in its coronavirus economic recovery. However, a strong dollar typically has a
negative impact on the economy (it makes our products more expensive to the
rest of the world) and a positive effect on inflation (it makes foreign goods
cheaper)---which does not exactly match up with the narrative on stocks and
bonds.
Friday in the
charts.
https://www.zerohedge.com/markets/media-momo-meltdown-small-caps-spacs-slammed-bonds-buck-bounce
New commodity supercycle?
https://www.zerohedge.com/the-market-ear/celgym4b5p
Fundamental
Headlines
The
Economy
Review of Last Week
US statistical releases
made for some pretty dismal reading last week.
The overall data as well as the primary indicators (four negative, one
positive) were overwhelmingly poor. That
said, much of it reflected February’s performance which was very adversely
impacted by weather. So again, I am not
really putting too much weight on these numbers, i.e. I do not think this
argues for any diminution of the outlook for continued economic recovery.
Overseas, the data
flow was the polar opposite---it was almost universally upbeat. The reason?
Most of it was from March. These
results build on those of the prior week, raising the hope of a meaningful
pickup in global growth.
The burden on EU
growth.
https://www.zerohedge.com/economics/eurozone-weakness-much-more-covid
Bottom line. The US
economy continues to recover aided by expansive monetary and fiscal
policies. That should be enough to
return growth to its prior long term below average secular rate. But I believe that those aforementioned policies
will put a lid on the economy’s secular growth; and indeed, could adversely impact
it via the ignition of inflationary forces.
US
International
Other
Update on big four economic indicators.
Used car prices up 3% in last two weeks.
https://www.zerohedge.com/markets/here-it-comes-used-car-prices-soar-3-just-last-2-weeks
The Fed
QE doesn’t work because it can’t.
The Fed pushes back against Summer’s
warning. (I remind you that the Fed has never, ever, ever in its entire
history tightened monetary policy before inflation got out of control.)
https://www.nytimes.com/2021/03/25/business/economy/larry-summers-federal-reserve.html
Bottom
line.
Ten dividend growth stocks to beat the Market.
Is bitcoin really a hedge?
https://www.zerohedge.com/crypto/henrich-bitcoin-hedge-myth
The latest strategy piece from Morgan
Stanley.
News on Stocks in Our Portfolios
AT&T (NYSE:T) declares
$0.52/share quarterly dividend, in line with previous.
What
I am reading today
Four factors in determining your
retirement withdrawal rate.
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for Survival’s website (http://investingforsurvival.com/home)
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