The Morning Call
10/1/19
The
Market
Technical
The Averages (26916,
2976) were up yesterday on slightly higher volume and improved breadth. The VIX was down 5 5/8% ending back below its
200 DMA (now resistance), negating Friday’s break but still above its 100 DMA
(now resistance; if it remains above it through the close today, it will revert
to support). My directional assumptions
remain that short term the 9/4 gap up opens need to be filled but longer term
the momentum is to the upside.
The
long bond up another ¼ % continuing to recover from the 9/4 selloff. However, gold resumed its losing way, getting
whacked 1 ½%. The dollar remains in a
solid uptrend (up 3/8%). Long term, all
the charts remain solid; though short term, GLD appears to have further downside.
Monday in the charts.
How accurate is an
inverted yield curve in predicting recession?
Is it a bubble
yet?
Fundamental
Headlines
Yesterday’s economic
data was mixed: the September Chicago PMI was below estimates while the September
Dallas Fed manufacturing index was above.
Overseas, the
numbers were also mixed: the September Chinese Caixin manufacturing and
composite PMI’s, Q2 UK business investment and August EU unemployment were
better than anticipated while August Japanese housing starts and construction
orders, the September Chinese Caixin services PMI, August German retail sales, September
German CPI were worse and Q2 UK GDP growth was in line.
World Trade Organization lowers its
global growth forecast.
Aside from some
chatter about yesterday being the end of the quarter (portfolio window
dressing, earnings season starts soon), there were no major headlines. However, there was some news on subjects that
investors are monitoring:
An interview with
the NY Fed chief---who is responsible for handling the current dollar liquidity
problem.
Dollar liquidity
problems persist even though ‘end of quarter window dressing’ is behind us.
Bank of Japan seems to be
moving toward a tighter monetary policy.
The bond market doesn’t like it.
Things you should know
about the ‘whistleblower’.
China doubles
troop level in Hong Kong.
***overnight,
a protestor was shot. His condition not reported.
Bottom line: the US stats continue to support
my sluggish growth forecast while the international data remains weak, which, if
it continues, could begin having an impact on our numbers. Until that happens (see the above link on the
predictability of the yield curve on a recession), Fed policy (easy money) will
likely remain the dominant force in asset pricing, i.e. the upward bias of the
Market will continue. I will continue to
use that strength to Sell Half of any stock that reaches that Range.
The risk to the bullish trade war
resolution scenario.
Earnings season
and the truth about Wall Street analysis.
News on Stocks in Our Portfolios
Economics
This Week’s Data
US
The
September Chicago PMI was 47.1 versus consensus of 50.2.
The
September Dallas Fed manufacturing index came in at 1.5 versus estimates of
-2.3.
Month to date retail
chain store sales grew faster than in the prior week.
International
August
Japanese unemployment was 2.2% versus forecasts of 2.3%; its Q3 all industry
capex was up 6.6% versus up 7.0%, the large manufacturers index was 5 versus 2,
the small manufacturers index was -4 versus -6, the large nonmanufacturers index
was 21 versus 20.
September
UK housing prices fell 0.2% versus expectations of +0.1%.
The
September German manufacturing PMI was 41.7 versus projections of 41.4.
The
September EU manufacturing PMI was 45.7 versus consensus of 56.6; core CPI was
up 1%, in line.
Other
What EU membership costs the UK
annually.
Houthi’s
annihilate three Saudi brigades.
Saudi crude production restored to per-attack
level.
What
I am reading today
Sweden
makes it legal for jihadist to leave with the intent to commit violence and
then return. That can’t end well.
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