The Morning Call--Enjoy The Ride But Be Careful
The Morning Call
2/5/21
The Market
Technical
Thursday in the charts.
Redditors Abandon Squeezes, Panic-Buy Penny-Stocks As USD Hits 2-Mo Highs
Surging dollar could spell problems for equities.
Surging Dollar Could Be The Bull In Stock Rally's China Shop
Fundamental
Headlines
The Economy
US
December factory orders rose 1.1% versus estimates of +0.7%.
The December trade deficit was $66.6 billion versus projections of $65.9 billion.
January nonfarm payrolls increased 49,000 versus expectations of 50,000; however, private payrolls were up 6,000 versus 50,000; the unemployment rate was 6.3% versus 6.7%.
January Payrolls Miss: Only 49K Jobs Added As Unemployment Rate Tumbles To 6.3%
International
December Japanese household spending rose 0.9% versus forecasts of -1.9%; December leading economic indicators came in at 94.9 versus 96.1 in November.
December German factory orders fell 1.9% versus consensus of -1.0%.
Other
December vehicle sales per capita.
Vehicle Sales Per Capita as of December 2020
Hotel occupancy down 29.6% YoY.
Hotels: Occupancy Rate Declined 29.6% Year-over-year
JP Morgan’s consumer data shows consumer spending slipping.
JPMorgan's Nationwide Consumer Data Slips As COVID 'Dark Winter' Drowns Recovery
Keep on borrowing and buying.
Fiscal Policy
Senate passes Biden’s $1.9 trillion relief package.
Senate Dems Push Through $1.9TN Stimulus Blueprint As Harris Casts First Tiebreaker
Short Squeeze
The truth about naked short selling.
Naked Short Selling: The Truth Is Much Worse Than You Have Been Told
Bottom line. It looks like we will get the full $1.9 trillion stimulus package which is chocked full of unnecessary/unproductive spending. This will keep the budget deficit and national debt on track the achieve ever more glorious highs. And with the Fed out there pumping, what more could investors ask for? It may not be good for the long term secular growth of the economy but apparently not enough of us care to make a difference. Enjoy the ride but exercise some caution and take profits/build cash when a holding reaches full valuation.
More on valuations.
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
What game are you playing?
https://alephblog.com/2021/02/03/what-game-are-you-playing/
Part 2.
https://www.nytimes.com/2021/02/04/upshot/stock-market-winning-strategy.html
News on Stocks in Our Portfolios
Cummins (NYSE:CMI): Q4 GAAP EPS of $3.36 beats by $0.54.
Revenue of $5.83B (+4.5% Y/Y) beats by $650M.
Qualcomm (NASDAQ:QCOM): FQ1 Non-GAAP EPS of $2.17 beats by $0.07; GAAP EPS of $2.12 beats by $0.30.
Revenue of $8.24B (+62.2% Y/Y) misses by $20M.
Illinois Tool Works (NYSE:ITW): Q4 GAAP EPS of $2.02 beats by $0.24.
Revenue of $3.5B (+0.9% Y/Y) beats by $190M.
C.H. Robinson Worldwide (NASDAQ:CHRW) declares $0.51/share quarterly dividend, in line with previous.
What I am reading today
Reasons for optimism about artificial intelligence.
https://www.adamsmith.org/blog/reasons-for-optimism-artificial-intelligence
Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.
Analyst's Disclosure: I am/we are long cgrw, cmi, itw, QCOM.
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