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The Morning Call---And The Beat Goes On.

Jul. 15, 2020 9:11 AM ETCMI, PG
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Value, Growth At A Reasonable Price, Dividend Investing

Seeking Alpha Analyst Since 2010

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 46 years of investment experience includes institutional portfolio management at Scudder. Stevens and Clark and Bear Stearns, managing a risk arbitrage hedge fund and an investment banking boutique specializing in funding second stage private companies. Through his involvement with Investing for Survival and Seeking Alpha, Steve hopes that his experience can help other investors build their wealth while avoiding tough lessons that he learned the hard way.

The Morning Call


The Market


The Averages (26642, 3197) had a blockbuster day, though volume was down and stocks are nearing overbought territory. The Dow finished above its 200 DMA (now resistance; if it remains there through the close on Friday, it will revert to support). Until the reversion occurs, the indices will remain out of sync. But clearly this is a positive development. On the other hand, they are still out of sync with respect to those ‘island tops’ [the S&P filled that gap, the Dow has not]. As I have noted previously, stocks will be directionless until those inconsistencies are corrected.

For Nasdaq-rally skeptics, remember that momentum doesn't die easily

Option traders set new speculative record.

Options traders set new speculative record

Still, the short term the technical picture is improving. I am sticking with my assumption that the Market’s bias is to the upside---at least until/unless the Averages revert their DMA’s to resistance.

With the other indicators, yesterday was a repeat of Monday---gold was up, the long bond was up and the dollar was down. This collective pin action is consistent with itself and with a weak economic outlook.

What is the Treasury market trying to tell us?

Parsing The Treasury Market's Mixed Messages

Tuesday in the charts.

Dow Outpaces Nasdaq For 3rd Straight Day; Bonds, Bullion, & Bitcoin Bid



The economy

Yesterday was a big one for data. In the US, the stats were mixed: month to date retail chain store sales growth and the June small business optimism index were better than expected while the June budget deficit and June CPI were disappointing.


The May UK trade balance and manufacturing production plus the July EU economic sentiment came in ahead of estimates; May UK industrial production and the June German CPI were in line; May Japanese industrial production, May UK GDP, May EU industrial production, the June Chinese trade balance and July German economic sentiment were below expectations.

The recovery maybe fizzling.

After the fastest recession in U.S. history, the economic recovery may be fizzling

A surge in small business bankruptcies.

A Surge In Small Business Bankruptcies Is Underway

Mohamed El Erian warns that financial stress is far from over.

El-Erian Warns "Financial Stress From COVID Is Far From Over"

The coronavirus

An opposing view.

Larry Brilliant on How Well We Are Fighting Covid-19

Florida labs admit ‘major error’.

Florida Labs Acknowledge "Major Errors" After Reporting Positivity Rates Of 100%


US/China trade data shows signs of recovery.

Political Calculations: U.S.-China Trade Data Shows Start Of Coronavirus Recession Recovery

US says China’s ‘island building’ in the South China Sea is unlawful.

Beijing's South China Sea project illegal, says US

Trump signs China sanctions bill.

Trump Signs Sanctions Bill Ending Preferential Treatment For Hong Kong

Bottom line. the beat goes on. Marginal improvement in the economy; the media and the politicians intent on making matters worse by keeping the economy in lockdown; Trump (correctly) poking the Chinese in the eye; and stock prices soar. God bless the Fed; at least until this Ponzi scheme collapses.

July BofA fund manager survey.

Near Record Numbers On Wall Street Say Stocks Again "Overvalued"; Just 14% Believe In A V-Shaped Recovery

Passive investing and the mispricing of assets.

Passive Fingerprints Are All Over This Crazy Market

News on Stocks in Our Portfolios

Cummins (NYSE:CMI) declares $1.311/share quarterly dividend, in line with previous.

Procter & Gamble (NYSE:PG) declares $0.7907/share quarterly dividend, in line with previous.


This Week’s Data


Month to date retail chain store sales growth fell less than in the prior week.

Weekly mortgage applications rose 5.1% while purchase applications declined 6.1%.

The July NY Fed manufacturing index came in at 17.2 versus consensus of 10.0.


The June Japanese trade balance was +$1.278 billion versus expectations of +$1.11 billion.

June UK CPI was up 0.1% versus estimates of 0.0%; core CPI was +0.2% versus -0.1%.


Leading index for commercial real estate declined in June.

Leading Index for Commercial Real Estate Decreased Further in June

What I am reading today

The social security funding crisis has arrived.

Gary Shilling: The Social Security's Funding Crisis Has Arrived

Quote of the day.

Bonus Quotation of the Day...

Who is making decisions about our lives?

Who Is Making Decisions about Our Lives

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Analyst's Disclosure: I am/we are long cmi, PG.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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