The Morning Call---And The Beat Goes On.
Value, Growth At A Reasonable Price, Dividend Investing
Seeking Alpha Analyst Since 2010
The Morning Call
7/15/20
The Market
Technical
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
Fundamental
Headlines
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.
Overseas,
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%
China
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.
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.
Economics
This Week’s Data
US
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.
International
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%.
Other
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.
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.
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