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The Morning Call--In Praise Of Cash

Jul. 24, 2020 9:10 AM ETBF.A, BF.B, GWW, MSFT, T, T.PR.A, TBB, TBC
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The Morning Call


The Market


The Averages (26652, 3235) retreated yesterday. The S&P finished back on its June high while the Dow fell back after just filling its ‘island top’ gap. Volume was flat, breadth was weak and the VIX bounced off its June low. So, it was a technically disappointing day. But I am sticking with my assumption that the Market’s bias is to the upside.

Gold was up another 7/8% on big volume, making another new nine year high. The long bond was also up (1 ½%), keeping its upward momentum going. The dollar declined. All this suggests a weak economy.

Treasuries poised to test new lows.

Are Treasury Yields Poised To Test New Lows?

Gold has only one resistance point left.

Gold Has Only One Resistance Point Left: The All-Time High

Thursday in the charts.

Bullion, Bonds, & Bitcoin Jump As Stocks Slump



The Economy


June leading economic indicators were up 2.0% versus expectations of +2.1%

Conference Board Leading Economic Index Increased in June

The July Kansas City Fed manufacturing index came in at 7 versus estimates of 5.


July EU consumer confidence was reported at -15 versus forecasts of -12; the flash manufacturing PMI was 51.1 versus 50.0; the services PMI was 55.1 versus 51.0; the composite PMI was 54.8 versus 51.1.

June UK retail sales were down 1.6% versus consensus of -6.4%; ex fuel, they were up 13.5 versus +7.5; July consumer confidence was -27 versus predictions of -26; the July flash manufacturing PMI was 53.6 versus 52.0; the services PMI was 56.6 versus 51.5; the composite PMI was 52.1 versus 51.1.

The July German flash manufacturing PMI was 51.1 versus projections of 50.0; the services PMI was 56.7 versus 50.5; the composite PMI was 55.5 versus 50.3.


High frequency indicators point to late June slowdown.

High Frequency Indicators Confirm US Economy Stalled In Late June

The feared jumbo mortgage debacle is here.

https://www.marketwatch.com/story/the-feared-jumbo-mortgage-debacle-is-here-thanks-to-the-coronavirus-and-ready-to-pound-the-housing- market-2020-07-22?mod=home-page

South Korea falls into recession.

South Korea falls into recession as exports slump

The Fed

The Fed already planning its next rescue operation.

As Stocks Tumble Fed Swoops In With A Stick Save, Expanding Bailout Facility Counterparties

Rethinking asset correlation in the era of QE.

It's Time To Rethink Asset Correlations In Era Of QE

Global fiscal/monetary policies are creating bubbles everywhere.

Fiscal & Monetary Policies Inflating Bubbles While Fighting Virus


Chinese shutter a US consulate in retaliation for Houston.

China Shutters American Consulate In Chengdu As "New Cold War" Heats Up

Pompeo calls for a ‘peoples’ uprising’ in China.

Pompeo To Essentially Call For 'A People's Uprising' In Communist China

Bottom line. In praise of cash.

This Has Never Happened Before

The future may not look like the past.

The Light of History - The Irrelevant Investor

News on Stocks in Our Portfolios

AT&T (NYSE:T): Q2 Non-GAAP EPS of $0.83 beats by $0.04; GAAP EPS of $0.17 misses by $0.38.

Revenue of $40.95B (-9.0% Y/Y) in-line.

Microsoft (NASDAQ:MSFT): Q4 GAAP EPS of $1.46 beats by $0.09.

Revenue of $38.03B (+12.8% Y/Y) beats by $1.48B.

W.W. Grainger (NYSE:GWW): Q2 Non-GAAP EPS of $3.75 beats by $0.24; GAAP EPS of $2.10 misses by $0.86.

Revenue of $2.84B (-1.7% Y/Y) beats by $70M.

Brown-Forman (NYSE:BF.B) declares $0.1743/share quarterly dividend, in line with previous.

What I am reading today

Shadow lenders are helping to fuel the student loan crisis.

How Shady 'Shadow Lenders' Are Helping Fuel The $1.6 Trillion Student-Loan Crisis

Good things taken too far.

Good Things Taken Too Far

Why this revolution isn’t like the 60’s.

Why This Revolution Isn't Like the '60s

Quote of the day.

Quotation of the Day...

This time is different.

Federal Forces Have Gone Into U.S. Cities Before. Why This Time Is Different.

Interview with former Israeli intelligence chief on the recent explosions in Iran.

The explosions rocking Iran

John Cleese on political correctness.

John Cleese: Society Is Now Controlled By The Most Touchy, Emotionally Unstable, & Fragile People

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Analyst's Disclosure: I am/we are long bf.b, gww.msft, t.

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