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The Morning Call--More Debt = Slower Growth

Sep. 23, 2020 9:10 AM ETGIS, MA, NKE
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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 (27288, 3315) recovered a part of Monday’s losses, though volume was down, breadth improved only slightly, the VIX continues to show signs of elevated investor uncertainty and both remain in very short term downtrends. I continue to believe that the long term bias is to the upside and will remain so until QEInfinity/Forever ceases or is discredited. Meanwhile, support exists at the indices’ 100 DMA’s (26208/3159), their 200 DMA’s (26208/3097) and the lower boundary of their short term trading ranges (18213/2991).

Gold fell again, finishing below the July/August minor support level. Barring a quick reversal, this is a negative for gold. TLT was also down, ending back below its 100 DMA (now resistance) and the trend of lower highs. The dollar was up another 3/8%, closing near the upper boundary of its short term downtrend and setting a new higher low and higher high. So, each of these indices is challenging boundaries of recent consolidation ranges, appears to be breaking out which, if successful suggests a stronger economy/higher interest rates.

Tuesday in the charts.

Stocks, Silver, Bonds, Black Gold, & Greenback Bid But VIX Election-Bump Worsens



The Economy


Month to date retail chain store sales improved significantly from the prior week.

Weekly mortgage applications were up 6.8% with purchase applications up 3.4%.

July existing home sales were up 2.4%, in line.

NAR: Existing-Home Sales Increased to 6.00 million in August

The September Richmond Fed manufacturing index came in at 21 versus estimates of 10.

Richmond Fed Manufacturing Improved in September


The September Japanese flash manufacturing PMI came in at 47.3 versus consensus of 48.0; the services PMI was 45.6 versus 47; the composite PMI was 45.5 versus 48.0.

The September German flash manufacturing PMI came in at 56.6 versus expectations of 56,5; the services PMI was 49.1 versus 53; the composite PMI was 53.7 versus 54.1.

The September EU flash manufacturing PMI came in at 53.7 versus forecasts of 51.9; the services PMI was 47.5 versus 50.8; the composite PMI was 50.1 versus 51.7.

The September UK flash manufacturing PMI came in at 54.3 versus projections of 54.1; the services PMI was 55.1 versus 56; the composite PMI was 55.7 versus 56.3.

October German consumer confidence was reported at -1.6 versus predictions of -1.0.


Is the US economic recovering fading?

Is The US Economic Recovery Fading?

Two thirds of the hotel properties in the US say that they will not last another six months at current occupancy rates.

Time To Go All-In The "Big Short 3.0"? Two-Thirds Of US Hotels Say They Won't Last Six More Month At Current Occupancy Levels

Fiscal Policy

The CBO just released its latest projections for US government debt growth. You know that mounting government debt is one of the pillars of my forecast of a declining long term secular economic growth rate. At the risk of being repetitious, the primary reason is ‘crowding out’; that is the government sucks so much money out of the private economy to service its debt that there is less investment capital available to fund economic growth. And since government expenditures do little to enhance productivity, inflation increasingly becomes a problem.

Budget Office Releases Terrifying Long-Term Debt Forecast

The coronavirus

September US coronavirus stats.

September 21 COVID-19 Test Results

Experts worry about the rush for results.

Experts Worry As Leading COVID-19 Vaccines Adopt Trial Shortcuts In "Rush For Results"

Bottom line

Does the Market realize no help is coming?

Did The Market Just Realize No Help Is Coming?

The easiest thing in investing.

The Easiest Thing in Investing - The Irrelevant Investor

Intangible capital and the value factor.

Intangible Capital and the Value Factor: Has Your Value Definition Just Expired?

News on Stocks in Our Portfolios

Mastercard (NYSE:MA) declares $0.40/share quarterly dividend, in line with previous.

Nike (NYSE:NKE): FQ1 GAAP EPS of $0.95 beats by $0.47.

Revenue of $10.6B (-0.6% Y/Y) beats by $1.45B.

General Mills (NYSE:GIS): FQ1 Non-GAAP EPS of $1.00 beats by $0.13; GAAP EPS of $1.03 beats by $0.15.

Revenue of $4.36B (+9.0% Y/Y) beats by $150M.

General Mills (NYSE:GIS) declares $0.51/share quarterly dividend, 4.1% increase from prior dividend of $0.49.

What I am reading today

A ray of hope in college discourse.

Inside the Student-Led Movement to Depolarize College

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 gis, ma, nke.

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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