An Analysis of Daily Events that Impact Your Money
Friday, September 25, 2020
Thursday, September 24, 2020
The Morning Call--Safety Trade or higher rates?
The Morning Call
9/24/20
The
Market
Technical
The Averages (26763, 3236) maintained their downward move
(very short term downtrend), posting a new lower high on increased volume and weaker
breadth. While I continue to believe
that the long term bias is to the upside, the immediate trend is clearly
down. The good news is that both indices
have multiple support levels in near proximity: 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 got whacked
again, finishing below the July/August minor support level for a second day. While its long term trends are up and support
exists at its 100/200 DMA’s, this recent negative pin action can’t be ignore. TLT rebounded slightly. That is a plus, but it continues to struggle
to push above the trend of lower highs and its 100 DMA (now resistance). The
dollar jumped another ½%, ending above the upper boundary of its short term
downtrend (if it remains there through the close on Friday, it will reset to a
trading range) and setting a new higher high.
If the dollar
successfully challenges its short term downtrend, it would suggest either a
move to a safety trade or higher interest rates. But TLT is resisting a move lower (higher
interest rates) and is trying to push higher (safety trade). On the other hand, GLD is breaking down, pointing
to higher rates or a move away from a safety trade. Of course, the drop in equity prices can mean
higher rates or a retreat to safety. In
short confusion. Time to be careful.
VIX term structure
shows rising uncertainty.
Interactive
Brokers hikes margin requirements.
Wednesday in the
charts.
https://www.zerohedge.com/markets/dollarnado-slams-stocks-gold-silver-election-angst-spreads
Fundamental
Headlines
The
Economy
US
Weekly jobless claims rose by 870,000 versus
consensus of 843,000.
The September
flash manufacturing PMI came in at 53.5 versus forecasts of 53.1; the services
PMI was 54.6 versus 54.7; the composite PMI was 54.4 versus 53.0.
International
The September
German business climate index was reported at 92.6 versus expectations of 93.0;
the current conditions index was 87.9 versus 89.0.
Other
The
coronavirus
Overnight update.
Liberty or lockdown.
https://www.aier.org/article/liberty-or-lockdown/
Bottom
line
Estimating future stock returns.
https://alephblog.com/2020/09/22/estimating-future-stock-returns-june-2020-update/
The most dangerous investment move you can
make (must read).
https://www.servowealth.com/blog/the-most-dangerous-investing-move-you-can-make
News on Stocks in Our Portfolios
FactSet
Research Systems (NYSE:FDS):
FQ4 Non-GAAP EPS of $2.88 beats by $0.35; GAAP EPS of $2.29 misses
by $0.05.
Revenue
of $383.6M (+5.3% Y/Y) beats by $4.86M.
Accenture (NYSE:ACN): FQ4
Non-GAAP EPS of $1.70 misses by $0.03; GAAP EPS of $1.99 beats
by $0.26.
Revenue
of $10.84B (-2.0% Y/Y) misses by $90M.
Accenture (NYSE:ACN) declares $0.88/share quarterly dividend, 10% increase from
prior dividend of $0.80.
What
I am reading today
Why isn’t Jamie Dimon
going to jail?
School bus sized asteroid will ‘buzz’
earth today.
https://www.zerohedge.com/technology/watch-live-school-bus-sized-asteroid-buzz-earth-today
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
Wednesday, September 23, 2020
The Morning Call---More debt = slower growth
The Morning Call
9/23/20
The
Market
Technical
The Averages (27288, 3315) recovered a part of Monday’s
losses, though volume was down, breadth improved only slightly, the VIX continues
to show signs of elevated investor uncertainty and both remain in very short
term downtrends. I continue to believe
that the long term bias is to the upside and will remain so until
QEInfinity/Forever ceases or is discredited.
Meanwhile, support exists at the indices’ 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 again, finishing
below the July/August minor support level.
Barring a quick reversal, this is a negative for gold. TLT was also down, ending back below its 100
DMA (now resistance) and the trend of lower highs. The dollar was up another
3/8%, closing near the upper boundary of its short term downtrend and setting a
new higher low and higher high. So, each
of these indices is challenging boundaries of recent consolidation ranges,
appears to be breaking out which, if successful suggests a stronger economy/higher
interest rates.
Tuesday in the
charts.
https://www.zerohedge.com/markets/stocks-silver-dollar-bonds-oil-rally-vix-election-hump-worsens
Fundamental
Headlines
The
Economy
US
Month to date retail
chain store sales improved significantly from the prior week.
Weekly mortgage
applications were up 6.8% with purchase applications up 3.4%.
July existing home
sales were up 2.4%, in line.
https://www.calculatedriskblog.com/2020/09/nar-existing-home-sales-increased-to.html
The September Richmond
Fed manufacturing index came in at 21 versus estimates of 10.
International
The September Japanese
flash manufacturing PMI came in at 47.3 versus consensus of 48.0; the services PMI
was 45.6 versus 47; the composite PMI was 45.5 versus 48.0.
The September German
flash manufacturing PMI came in at 56.6 versus expectations of 56,5; the services
PMI was 49.1 versus 53; the composite PMI was 53.7 versus 54.1.
The September EU
flash manufacturing PMI came in at 53.7 versus forecasts of 51.9; the services PMI
was 47.5 versus 50.8; the composite PMI was 50.1 versus 51.7.
The September UK
flash manufacturing PMI came in at 54.3 versus projections of 54.1; the services
PMI was 55.1 versus 56; the composite PMI was 55.7 versus 56.3.
October German
consumer confidence was reported at -1.6 versus predictions of -1.0.
Other
Is the US economic recovering fading?
http://www.capitalspectator.com/is-the-us-economic-recovery-fading/
Two thirds of the
hotel properties in the US say that they will not last another six months at
current occupancy rates.
Fiscal
Policy
The CBO just released
its latest projections for US government debt growth. You know that mounting government debt is one
of the pillars of my forecast of a declining long term secular economic growth rate. At the risk of being repetitious, the primary
reason is ‘crowding out’; that is the government sucks so much money out of the
private economy to service its debt that there is less investment capital available
to fund economic growth. And since
government expenditures do little to enhance productivity, inflation increasingly
becomes a problem.
The
coronavirus
September US coronavirus stats.
https://www.calculatedriskblog.com/2020/09/september-21-covid-19-test-results.html
Experts worry about the rush for results.
Bottom
line
Does the Market realize no help is coming?
https://www.zerohedge.com/markets/did-market-just-realize-no-help-coming
The easiest thing in investing.
https://theirrelevantinvestor.com/2020/09/21/the-easiest-thing-in-investing/
Intangible capital and the value factor.
News on Stocks in Our Portfolios
Mastercard (NYSE:MA) declares $0.40/share quarterly dividend, in line with
previous.
Nike (NYSE:NKE): FQ1
GAAP EPS of $0.95 beats by $0.47.
Revenue
of $10.6B (-0.6% Y/Y) beats by $1.45B.
General
Mills (NYSE:GIS):
FQ1 Non-GAAP EPS of $1.00 beats by $0.13; GAAP EPS of $1.03 beats
by $0.15.
Revenue
of $4.36B (+9.0% Y/Y) beats by $150M.
General Mills (NYSE:GIS) declares $0.51/share quarterly dividend, 4.1% increase from
prior dividend of $0.49.
What
I am reading today
A
ray of hope in college discourse.
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
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.
Monday in the
charts.
Fundamental
Headlines
The
Economy
US
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.
The
coronavirus
Overnight update.
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.
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
More on valuations.
How big a drawdown can you survive?
https://thereformedbroker.com/2020/09/21/how-big-a-drawdown-can-you-survive/
When to change.
https://humbledollar.com/2020/09/when-to-change/
Negativity is not an investment strategy.
https://awealthofcommonsense.com/2020/09/negativity-is-not-an-investment-strategy/
News on Stocks in Our Portfolios
What
I am reading today
Discovery of an ancient city
in China.
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
Monday, September 21, 2020
Monday Morning Chartology
The Morning Call
9/21/20
The
Market
Technical
The
S&P remains above both DMA’s and in intermediate and long term
uptrends. Still, it is now developing a
very short term downtrend; although, there is lots of support at its 100 DMA,
200 DMA, and the lower boundaries of its short term trading range and
intermediate term uptrend. As you know, I
believe that the Market’s bias will remain to the upside as long as the Fed
continues to pump money into the financial system. However, shorter term, a test of one or more
of the above mentioned support levels would not be surprising.
I have been noting for the last month that the long bond was in a consolidation phase. Here you can see the series of lower highs and higher lows---typical of consolidation. A break of one those trends would point to a move in the direction of the break.
While
the longer term chart for GLD is positive, you can see that it has been in a fairly
tight trading pattern since early August---making progressively lower highs
(not good) but holding a minor support level (good). This is characteristic of consolidation. So, we wait for a break of one those trend lines
to give us directional guidance.
The
dollar has been in a solid declining trend since March and trades below both DMA’s. It made a low in early September near the
lower boundaries of both its short term downtrend and intermediate term uptrend
and since bounced. While it can’t make a
higher high, it is holding above that last lower low. However, it needs to successfully challenge
the short term downtrend before assuming that any recovery is taking place.
I can’t glean anything
of informational value from the VIX chart.
Friday in the charts.
Fundamental
Headlines
The
Economy
Last Week in Review
The stats
last week were negative as were the primary indicators. This adds more evidence to the notion that
the economy is improving but not likely in ‘V’ shape that is hoped for. Overseas,
the indicators were overwhelmingly positive---which continues the pattern of irregular
growth. I think that unfortunately their
sluggish performance will serve to restrain our own growth.
In other news, both the Fed and the Bank of England
held their regular meetings and, like the ECB in the prior week, left rates and
QE unchanged. So, the beat goes on.
Whatever the
shape of the recovery, 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.
US
The August Chicago Fed national activity index
was reported at .79 versus estimates of
1.95.
International
Other
The
latest Q3 nowcasts.
https://www.calculatedriskblog.com/2020/09/q3-gdp-forecasts_18.html
You do not solve
lockdowns with more central planning (must read).
Global debt is exploding.
https://www.zerohedge.com/markets/global-debt-exploding-shocking-rate
The
Fed
Fed weighs a second stress test and capping
bank dividends.
The
coronavirus
Nearly 60% of coronavirus business closures are
permanent.
https://nypost.com/2020/09/17/majority-of-covid-19-business-closures-are-permanent-report/
China
Why China’s recovery is not what it seems.
https://ftalphaville.ft.com/2020/09/15/1600190531000/Why-China-s-recovery-is-not-what-it-seems/
Bottom
line. It ends when the money runs out.
https://www.zerohedge.com/markets/newton-physics-market-bubble
Part 2: The hazards of being in the grips of
growth mania.
https://www.zerohedge.com/markets/brilliant-brain-dead-risk-timing-manic-markets
Where value resides.
https://www.zerohedge.com/markets/tug-war-across-markets-hides-trade-lifetime
News on Stocks in Our Portfolios
Cisco: a bargain in the tech sector.
What
I am reading today
Ten
easy ways to save $870,000.
https://www.marketwatch.com/story/10-easy-ways-to-save-870000-2020-09-17
How
big money is powering the search for alien intelligence.
https://www.sciencemag.org/news/2020/09/how-big-money-powering-massive-hunt-alien-intelligence
The
bill for economic inequality is coming due.
https://www.zerohedge.com/markets/bill-americas-50-trillion-gluttony-inequality-overdue
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for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.