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The Morning Call--When The Irrational Becomes Rationalized

Sep. 02, 2020 9:11 AM ETBF.A, BF.B
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The Morning Call


The Market


The Averages (28646, 3526) rebounded nicely yesterday, maintaining their upward momentum. As you know, my assumption is that the Market’s bias is to the upside long term. However, shorter term, a number of factors are at work that could lead to some price weakness: (1) last week, both of the indices made a gap up open, joining those two gap up opens made four weeks ago, (2) the VIX continues to reflect investor concern [yesterday, it was down only fractionally on what was strong Market day], (3) the indices’ breadth remains in overbought territory while the rest of the Market weakens and (4) historically, September is the worst month of the year for Market performance.

Massive surge in speculative trading - AGAIN

Art Cashin on the short term effects of stock splits.

Art Cashin on the short-term effects of stock splits

Robinhood traders are not having that much impact on stock prices.

No, Robinhood Traders Aren't Affecting the Stock Market - Of Dollars And Data

Gold continued to move up, maintaining the uptrend off its March/June lows. TLT rallied another 1 1/8%; but it was still not enough to undo the damage done in last week’s selloff. Short term, its chart remains negative. The dollar rose, but its chart remains the ugliest of those indicators that I follow.

Tuesday in the charts.

"Option Insanity" Leads To Furious Meltup: Apple Bigger Than Russell, Emini New Record High



The Economy


Weekly mortgage applications declined 2% while purchase applications were off 0.2%.

Month to date retail chain store sales grew faster than in the prior week.

July construction spending rose 0.1% versus estimates of +1.0%.

Construction Spending Increased Slightly in July

The August manufacturing PMI was 53.1 versus consensus of 53.6.

Markit Manufacturing: Up in July

The August ISM manufacturing index was 56.0 versus expectations of 54.5.

ISM Manufacturing Index: Up 1.8 in July

August light vehicle sales came in at 15.1 million versus forecasts of 14.5


The August ADP private payroll report showed job increases of 425,000 versus projections of 950,000.

"Job Gains Are Minimal" - ADP Employment Dramatically Misses Expectations In August


July German retail sales fell 0.9% versus projections of +0.5%.

July EU PPI was +0.6% versus estimates of +0.5%.


July update on median household income.

Political Calculations: Median Household Income in July 2020

Framing lumber prices continue to soar.

Update: Framing Lumber Prices Up 150% Year-over-year

The Fed

The true costs of zombie companies and easy money.

The True Costs Of Zombie Companies And Easy Money

The coronavirus

How deep is your coronavirus religion?

Just How Deep Is Your Coronavirus Religion?

Millions of Americans have had their savings wiped out.

Millions Of Americans Had Their Emergency Savings Wiped Out By Downturn


US increases support for Taiwan.

U.S. increases support for Taiwan, says to counter rising China pressure

US/China decoupling is hard to do---this article seems a bit too optimistic.

US-China Decoupling Is Hard To Do

Bottom line When the irrational becomes rationalized.

2020: When The Irrational Became Rationalized

The latest from Mohamed El Erian.

El-Erian Warns Retail Face "Big Potential Losses" From Professionals Selling

News on Stocks in Our Portfolios

Brown-Forman (NYSE:BF.B): Q1 GAAP EPS of $0.67 beats by $0.37.

Revenue of $753M (-1.7% Y/Y) beats by $61.72M.

What I am reading today

Lucifer’s hammer.

Lucifer's Hammer | Epsilon Theory

Visit Investing for Survival’s website (Home | Investing for Survival | Investingforsurvival.com) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

Analyst's Disclosure: I am/we are long BF.B.

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