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The Morning Call

|Includes: Hormel Foods Corporation (HRL)

The Morning Call

9/24/19

The Market

Technical

The Averages (26949, 2991) were mixed (Dow up, S&P down) on lower volume (again). But breadth improved and the VIX was down 2 5/8% (a plus for stocks). Long term, my assumption is that prices go higher. Shorter term, the September 4th gap up open needs to be filled.

GLD was strong (up ½%). The dollar advanced (1/8%). The long bond was off three cents. These indicators are again pointing at the need for safety.

The dollar shortage eased but has not gone away.

Dollar Shortage Eases But Banks Still Signal $66 Billion Funding Shortfall In Fed Repo Operation

Monday in the charts.

https://www.zerohedge.com/markets/silver-soars-yield-curve-crashes-after-global-macro-data-plunges

Fundamental

Headlines

Yesterday’s economic numbers were upbeat: the August Chicago national activity index, the September manufacturing and composite PMI’s were better than expected while the September services PMI was worse.

David Rosenberg isn’t.

David Rosenberg: Even If The Fed Cuts Rates To 0%, A Recession Will Hit In 12 Months

Overseas the September German flash manufacturing, services and composite PMI’s were below estimates as were the September EU manufacturing, services and composite PMI’s. South Korean exports experienced their largest drop in a decade.

Bottom line: I noted in last weekend’s Closing Bell, that economy has been moving in fits and starts for the last five or six years. While yesterday’s strong stats on top of last week’s very positive data suggests that we are in one of those upbeat stretches, it is far too soon to be talking about a period of sustained growth. Especially with the international data continuing to weaken, a serious trade tiff between Japan and South Korea and mediocre odds of anything hugely promising to come out of the US/China trade dispute.

***overnight, China grants new tariff waivers on soybean purchases.

China Grants New Tariff Waivers For US Soybean Purchases

Odds of a trade deal.

Rabobank: There Won't Be A Trade Deal Breakthrough As China Would Have To Change Its Entire Economic Model

With equity prices near all-time highs, it is a time to be very conservative in approaching your assets. I believe taking some profits in big winners will prove a rewarding strategy.

Billionaire Hedge Fund Manager Paul Singer Hedges Against Upcoming Market Crash

The disconnect between the economy and the Market (must read).

The Disconnect Between The Markets & Economy Has Grown

News on Stocks in Our Portfolios

Hormel Foods (NYSE:HRL) declares 0.21/share quarterly dividend, in line with previous.

Economics

This Week’s Data

US

The September manufacturing PMI came in at 51.0 versus estimates of 50.3; the services PMI was 50.9 versus 51.3; the composite PMI was 51.0 versus 49.6.

International

July Japanese leading economic indicators came in at 93.7 versus forecasts of 93.6; the September manufacturing PMI was 48.9 versus 49.0; the services PMI was 52.8 versus 52.7; the composite PMI was 51.5 versus 51.1.

Other

Negative interest rates are a huge burden.

Mish: Negative Interest Rates Are Socio-Political Poison

What I am reading today

Evidence Iran violated nuclear deal from day one.

Evidence That Iran Violated The Nuclear Deal Since Day One?

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Disclosure: I am/we are long HRL.