7.18 - The Morning Call: What a Week that was.

A very good week for US stocks. The Dow made a new high close on Friday a 18516.55. The S&P had made an all time high. It didn't close far from those levels. .We are up 8% in 3 weeks. Double that since February. Sentiment wasn't that good. The most hated Bull market has become the most hated breakout The line up of celebratory cautioners was impressive. Gundlach, Gross Were headliners. How do they  explain that the VIX has dropped in half in the last month? The wall of Worry?

An attempted coup in Turkey doesn't seem to phase markets Oil is down.Gold is down. The 10 year Treasury Is up and working towards Resistance. We can't help but think that if the 10 year breaks out that it will run. Bondies have told us that it could go to a 2.50% yield.from here, The only way that happens is if money comes out of the Bond market and heads towards Equities. Precious metal and energy valuations will suffer.

FactSet looked at the first 30 transcripts and found favourite topics. Currency is of concern to 2/3rds of the sample. Interest rates tied with the price of Oil. Then came China and Brazil. ThenBrexit. Lastly Wages at 9,weather at 6 ,the election at 3. Zika was 0.

What will the Fed do? inflation isn't clear yet. CPI is +1%. Ex Food and Energy it's +2.3% PPI is negative. Ex food and energy it's +0.9% manufacturing productivity inched up to 103.9 Capacity Utilization Was also up a tad at 75.4. It's Retail sales that is carrying the ball..Overall it was up+3.0%  year over year in June. All in we've had year over year growth for several years.The American consumer is back. No thanks to the Government..not much help from Businesses either.

This week will be potentially a big one for Real estate.The NAHB Market Index comes this morning. Starts and Permits are tomorrowWednesday it's theMBA Mortgage Index. Thursday we get the FHFA House Price index and Existing home sales. The naysayers could be proved wrong if we get growing numbers.

Globally the Citi Surprise Index is positive again.The global PMI's are over 50, by 34of 50 reporting countries.The PBOC. has Let Be Known that their 3%deficit to GDP can go higher It was 2.4% last year. it may be 4-5% next year Property prices are fading.That is translating into a weaker Yuan.That was aided by the PBOC lower fixing of the Yuan.

Turkey seems like the market shrugged. We are bullish.Caution would have us keep an eye out for the 20DMA of the S&P. It's 2099. better safe than sorry.

Invest the Money

Edward Pennock CFA, Founding Partner

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2-2 The Morning Call:Yellen does Nothing. How long is she for the Job?

7.18 - The Morning Call: What a Week that was.

Fed, BOJ in the spotlight but no fireworks expected

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