Investing for Survival: ed yardini

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Tuesday, September 22, 2020

The Morning Call---Do Nothing

The Morning Call

9/22/20

The Market

Technical

The Averages (27147, 3281) had another rough day. The good news is that (1) the S&P closed both of its July gap up opens [the Dow filled one] and (2) the indices closed well off their intraday lows. The bad news is that (1) both of the indices are now in very short term downtrends and (2) given their September historical record of poor price performance, additional downside seems likely. That said, they both have lots of support levels in relatively close proximity that could keep the current decline modest---their 100 DMA’s (26208/3159), their 200 DMA’s (26208/3097) and the lower boundary of their short term trading ranges (18213/2991).

Gold fell 2%, finishing right on the July/August minor support level. TLT was up ½%, ending right on its 100 DMA (now resistance) and the trend of lower highs. The dollar spiked ¾%, breaking the trend of lower highs---the first positive development since March. So, each of these indices is challenging boundaries of recent consolidation ranges. Follow through.

Paper gold no longer as important.

https://www.zerohedge.com/markets/paper-gold-no-longer-important-bofa-finds-physical-demand-now-key-gold-prices

Monday in the charts.

https://www.zerohedge.com/markets/banks-bader-ginsburg-and-limey-lockdowns-slam-stocks-silver-usd-soars

Fundamental

Headlines

The Economy

International

Other

The latest from Ed Yardini (optimist).

http://blog.yardeni.com/2020/09/what-in-world-is-going-on-recovery-from.html

The latest from John Mauldin (pessimist).

https://www.advisorperspectives.com/commentaries/2020/09/18/stall-speed-economy

Household net worth increased $6 trillion in Q2.

https://www.calculatedriskblog.com/2020/09/feds-flow-of-funds-household-net-worth.html

The Fed

Powell begins two days of testimony before congress today. The Fed has released his prepared remarks.

https://www.zerohedge.com/economics/fed-releases-powells-congressional-hearing-prepared-remarks-defends-poor-uptake-main

The coronavirus

Overnight update.

https://www.zerohedge.com/geopolitical/us-suffers-most-new-covid-19-cases-5-weeks-doctors-warn-apocalyptic-fall-live-updates

An open letter from Belgian doctors to Belgian bureaucrats and Belgian media.

https://docs4opendebate.be/en/open-letter/

CDC steps on its own d**k again.

https://www.zerohedge.com/geopolitical/stunning-reversal-cdc-says-it-published-new-guidance-risks-airborne-covid-19-error

Bottom line Do nothing

https://www.zerohedge.com/markets/value-margin-safety-art-doing-nothing

Morgan Stanley turns bearish.

https://www.zerohedge.com/markets/nasdaq-plunge-dead-ahead-investors-dump-most-qqqs-20-years

Thursday, July 23, 2020

The Morning Call--In praise of cash

The Morning Call

7/24/20

The Market

Technical

The Averages (26652, 3235) retreated yesterday. The S&P finished back on its June high while the Dow fell back after just filling its ‘island top’ gap. Volume was flat, breadth was weak and the VIX bounced off its June low. So, it was a technically disappointing day. But I am sticking with my assumption that the Market’s bias is to the upside.

Gold was up another 7/8% on big volume, making another new nine year high. The long bond was also up (1 ½%), keeping its upward momentum going. The dollar declined. All this suggests a weak economy.

Treasuries poised to test new lows.

http://www.capitalspectator.com/are-treasury-yields-poised-to-test-new-lows/#more-14444

Gold has only one resistance point left.

https://www.zerohedge.com/commodities/gold-has-only-one-resistance-point-left-all-time-high

Thursday in the charts.

https://www.zerohedge.com/markets/bullion-bonds-bitcoin-jump-stocks-dump

Fundamental

Headlines

The Economy

June leading economic indicators were up 2.0% versus expectations of +2.1%

https://www.advisorperspectives.com/dshort/updates/2020/07/23/conference-board-leading-economic-index-increased-in-june

The July Kansas City Fed manufacturing index came in at 7 versus estimates of 5.

International

July EU consumer confidence was reported at -15 versus forecasts of -12.

Other

High frequency indicators point to late June slowdown.

https://www.zerohedge.com/markets/high-frequency-indicators-confirm-us-economy-stalled-late-june

The feared jumbo mortgage debacle is here.

https://www.marketwatch.com/story/the-feared-jumbo-mortgage-debacle-is-here-thanks-to-the-coronavirus-and-ready-to-pound-the-housing- market-2020-07-22?mod=home-page

South Korea falls into recession.

https://www.bbc.com/news/business-53496522

The Fed

The Fed already planning its next rescue operation.

https://www.zerohedge.com/markets/stocks-tumble-fed-swoops-stick-save-expanding-bailout-facility-counterparties

Rethinking asset correlation in the era of QE.

https://www.zerohedge.com/markets/its-time-rethink-asset-correlations-era-qe

Global fiscal/monetary policies are creating bubbles everywhere.

http://blog.yardeni.com/2020/07/fiscal-monetary-policies-inflating.html

China

Chinese to shutter a US consulate in retaliation for Houston.

https://www.zerohedge.com/geopolitical/beijing-plans-shutter-us-consulate-china-retaliation-houston-mission-closure

Pompeo calls for a ‘peoples’ uprising’ in China.

https://www.zerohedge.com/geopolitical/pompeo-essentially-call-peoples-uprising-communist-china-wsj

Bottom line. In praise of cash.

https://alephblog.com/2020/07/22/this-has-never-happened-before/

The future may not look like the past.

https://theirrelevantinvestor.com/2020/07/22/the-light-of-history/

News on Stocks in Our Portfolios

AT&T (NYSE:T): Q2 Non-GAAP EPS of $0.83 beats by $0.04; GAAP EPS of $0.17 misses by $0.38.

Revenue of $40.95B (-9.0% Y/Y) in-line.

Microsoft (NASDAQ:MSFT): Q4 GAAP EPS of $1.46 beats by $0.09.

Revenue of $38.03B (+12.8% Y/Y) beats by $1.48B.

W.W. Grainger (NYSE:GWW): Q2 Non-GAAP EPS of $3.75 beats by $0.24; GAAP EPS of $2.10 misses by $0.86.

Revenue of $2.84B (-1.7% Y/Y) beats by $70M.

Brown-Forman (NYSE:BF.B) declares $0.1743/share quarterly dividend, in line with previous.

What I am reading today

Shadow lenders are helping to fuel the student loan crisis.

https://www.zerohedge.com/economics/how-shady-shadow-lenders-are-helping-fuel-16-trillion-student-loan-crisis

Good things taken too far.

https://www.collaborativefund.com/blog/good-things-taken-too-far/

Why this revolution isn’t like the 60’s.

https://townhall.com/columnists/victordavishanson/2020/07/23/why-this-revolution-isnt-like-the-60s-n2572910

This time is different.

https://www.nytimes.com/2020/07/23/upshot/portland-protests-federal-response.html

Interview with former Israeli intelligence chief on the recent explosions in Iran.

https://www.powerlineblog.com/archives/2020/07/the-explosions-rocking-iran.php

John Cleese on political correctness.

https://www.zerohedge.com/political/john-cleese-society-now-controlled-most-touchy-emotionally-unstable-fragile-people

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Friday, June 12, 2020

The Morning Call---What blow off top?

The Morning Call

6/12/20

The Market

Technical

What blow off top? It would appear that is yesterday’s story with the Averages (25128, 3002) executing a Niagara Falls formation.

The negatives:

(1) both of the indices broke below the lower boundaries of their very short term uptrends; if they remain there through the close today, those trends will be negated,

(2) the DJIA finished back below its 200 DMA---the day after it reverted to support; if it remains there through the close today, it will return to resistance,

(3) the Dow ended right on its 100 DMA,

(4) the VIX skyrocketed, ending above the upper boundary of its very short term downtrend; if it remains there through the close today, that trend will be voided.

The positives:

(1) both closed their 6/5 gap up opens,

(2) while breadth was terrible but it helped relieve the significantly overbought condition of the Market.

My assumption remains that the Market’s bias is to the upside, though clearly yesterday’s pin action gives me pause. The question is, where will the indices find support? If they can hold at the level of their DMA’s, then that assumption will remain operative. A break below those levels would point to a retest of the March 23^rd lows.

http://blog.yardeni.com/2020/06/mamu-mother-of-all-meltups.html

Buy the dip or run for the hills?

https://www.zerohedge.com/markets/blain-we-have-reached-curious-limbo-markets

If this doesn’t convince you that investor psychology has reached the stage of absurd-and-beyond, then you should participate in the offering. Otherwise, treat it for what it is---another indication of an irrational Market.

https://www.zerohedge.com/markets/most-absurd-moment-history-capital-markets-hertz-plans-sell-1-billion-new-bankrupt-stock

Gold declined, leaving open the question as to whether it can reestablish upside momentum. The long bond rose, finishing above the last lower high---a big step to regaining upside momentum. The dollar was up, bouncing off the lower boundary of its short term trading range---a minor victory in an otherwise ugly chart.

Thursday in the charts.

https://www.zerohedge.com/markets/bloodbath-big-tech-black-gold-bitcoin-bonds-bullion-bid

Fundamental

Headlines

It was another light day for data. Weekly jobless claims rose but less than expected while May PPI was much higher than anticipated though core PPI was in line.

The real economic catastrophe has not hit yet.

https://www.buzzfeednews.com/article/tomgara/economy-recession-coronavirus

Nothing overseas.

The coronavirus

***overnight update.

https://www.zerohedge.com/geopolitical/india-accused-undercounting-deaths-who-warns-global-outbreak-getting-worse-live

More than 95% of UK coronavirus deaths had pre-existing conditions.

https://www.zerohedge.com/markets/over-95-uk-covid-19-deaths-had-pre-existing-condition

The impact of the coronavirus on small businesses.

http://econbrowser.com/archives/2020/06/guest-contribution-how-has-covid-19-already-impacted-small-businesses

The Fed

The Fed has created a bubble at the expense of the economy.

https://www.zerohedge.com/markets/bianco-fed-has-fostered-unprecedented-bubble-expense-economy

The Fed will bring everything down.

https://www.zerohedge.com/markets/stupid-and-ridiculous-rabobank-says-fed-will-cause-everything-come-crashing-down-epic-ruin

Bottom line: after a day in which Powell basically said that the Fed would do everything in its power, in whatever amount necessary, for as long as necessary, it was a bit of a surprise to me that stock prices would crash. Granted there are other problems for investors to worry about. But that is the point---investors’ unconditional faith in the Fed put would suggest those concerns of lesser importance in the scheme of things. Of course, this may have been a one day phenomenon. Stay tuned.

The odds are stacked against the bears.

https://global-macro-monitor.com/2020/06/10/why-so-few-bears-own-park-avenue-apartments/

News on Stocks in Our Portfolios

Economics

This Week’s Data

International

April Japanese industrial production fell 9.8% versus consensus of -9.1%; capacity utilization was down 13.5% versus down 2.6%.

The April UK trade balance was +L0.31 billion versus estimates of -L6.2 billion; industrial production was -20.3% versus -15.0%; manufacturing production was -24.3% versus -15.8%; GDP was -20.4% versus -18.4%.

April EU industrial production was down 17.1% versus forecasts of down 20.0%.

Other

Hotel occupancy down 45% YoY.

https://www.calculatedriskblog.com/2020/06/hotels-occupancy-rate-declined-453-year.html

The government says that there is no inflation---except for the things that you buy.

https://www.marketwatch.com/story/how-can-there-be-no-inflation-if-the-things-we-are-actually-buying-are-more-expensive-2020-06-10?mod=home-page

What I am reading today

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Thursday, May 7, 2020

The Morning Call--US/China tensions

The Morning Call

5/7/20

The Market

Technical

The Averages (23664, 2848) made a strong opening but faded into the close, finishing down on the day. Still they remained in that 4/17-4/20 trading range. My prior comment holds: ‘That the indices couldn’t hold above their 4/17 highs but also couldn’t develop follow through on last Thursday/Friday’s selloff suggests that they have found a standoff level between the bulls and bears. I wait the outcome.’

https://www.advisorperspectives.com/commentaries/2020/05/05/if-the-bear-market-is-over-why-are-commodities-and-transports-underperforming

The dollar had another good day on big volume. TLT and GLD sold off with the long bond making its first lower low in a long time. Both charts continue strong. Overall, the implication of yesterday’s pin action is a stronger economy despite a horrible ADP private payroll report and the poor performance of stocks.

In sum, yesterday’s price action across all Markets was a bit confusing.

Wednesday in the charts.

https://www.zerohedge.com/markets/nasdaq-continues-record-run-despite-biggest-job-loss-ever

Fundamental

Headlines

Yesterday’s numbers were mixed. Weekly mortgage and purchase applications rose while the April ADP private payroll report showed greater job losses than anticipated.

Overseas, the results were more upbeat. April EU and German services and composite PMI’s were all better than expected. But March German factory orders and the April UK construction PMI were disappointing.

The coronavirus

***overnight update.

https://www.zerohedge.com/geopolitical/new-coronavirus-cases-surge-highest-level-2-weeks-live-updates

The headline of the day came out of a Trump news conference in which he stated that (1) China may or may not live up to the terms of the recent trade deal and (2) the coronavirus was the ‘greatest attack on the US since Pearl Harbor’. To be sure, this is just rhetoric. But it still it will likely raise the level of tensions between the two powers. Irrespective of whether one agrees with a political/military strategy of playing hard ball with China, it raises the risks of detrimental economic consequences.

***overnight, it appears the US/Chinese trade negotiators could meet as soon as next week.

https://www.zerohedge.com/economics/top-trade-negotiators-us-china-meet-trump-threatens-scrap-deal

Belgium, not exactly a right wing government, accuses China of bio espionage (must read).

https://www.zerohedge.com/geopolitical/belgium-accuses-china-bio-espionage

Updated stats on the coronavirus.

https://politicalcalculations.blogspot.com/2020/05/most-states-show-slowing-progression-of.html#.XrLhKahKg2w

Nothing is ever as permanent as temporary government program.

https://www.adamsmith.org/blog/nothing-is-ever-as-permanent-as-a-temporary-government-scheme-this-must-not-be-true-after-covid19

When the bill comes due.

https://www.advisorperspectives.com/commentaries/2020/05/05/the-coronavirus-policy-wave-when-will-the-bill-come-due

In the meantime, job losses, death and soaring stock prices.

https://www.zerohedge.com/personal-finance/covid-america-73400-dead-33-million-jobless-stocks-soaring

The Fed

The Fed eats Buffett’s lunch.

http://blog.yardeni.com/2020/05/fed-eats-buffetts-lunch.html

Bank of England meets, leaves policies unchanged.

https://www.zerohedge.com/economics/boe-warns-worst-economic-slump-300-years

Bottom line: current valuation levels suggest that investors believe in a (1) either ‘V’ shaped economic recovery---although reading the below links indicate that not all are believers, (2) or QEInfinity. As you know, my vote is on the latter and will remain so until investors act otherwise.

What if the economy doesn’t match the Market’s ‘V’ shaped recovery?

http://www.capitalspectator.com/can-the-stock-markets-v-recovery-survive-economic-collapse/

Extraordinarily uncertain, indeed (must read).

https://www.zerohedge.com/markets/extraordinarily-uncertain-indeed

Tuesday, September 22, 2020

The Morning Call---Do Nothing

Thursday, July 23, 2020

The Morning Call--In praise of cash

Friday, June 12, 2020

The Morning Call---What blow off top?

Thursday, May 7, 2020

The Morning Call--US/China tensions

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