3/10/25
The Market
Technical
The S&P ended what was a lousy week on an up
note---for the second time in as many weeks. However, in the process it (1)
reset its 100 DMA from support to resistance, and (2) challenged its 200 DMA
unsuccessfully. The latter, of course, is the bright spot. That said, from its
current position, it could easily re-challenge that MA; so, I am by no means
suggesting the worst is over. At the moment, I would call it a very short term
reprieve. Follow through is again the watchword. Notice that there is a huge
open area between the 200 DMA and the next visible levels of support: (1) the
23.6% Fibonacci retracement level [~5225] and (2) the lower boundary of the
S&P’s short term uptrend [~5094].
A glimmer of hope.
https://www.zerohedge.com/markets/stocks-crater-below-key-support-level-glimmer-hope-emerges-bulls
TLT made a fresh higher high, then unsuccessfully
tested its 200 DMA (now resistance), rolled over and is now testing its 100 DMA
(now support). ‘the long bond has found at least a temporary
bottom; and while this move has all the makings of a major change in momentum,
it …….still has work to do before assuming a major bottom has been made.’
As I noted last week (and the prior
week), GLD had been getting a bit stretched technically speaking; and last
week’s pin action did something to correct that usually strong upward momentum. It
remains well within a very short term uptrend and in uptrends across all other
time frames as well as above all DMAs. The only fly in the ointment is that it made
a lower high last week; but at this point, it is not a big deal---just
something to watch. The gold miners (GDX) and silver (SLV) continue to lag dramatically,
and I continue to look for a reentry point in one or both.
The dollar made a major reversal last week (thanks
Donald), resetting both its (1) 200 DMA from support to resistance and (2)
short term trend from up to a trading range. And in the process, it created yet
another big gap down open. So there is a good deal of magnetic pull to the
upside; but, given the news flow, it will likely take a positive fundamental
development to release the pressure.
From TraderFeed: So what is the dominant theme in
the current market? Many traders would point to the fall in U.S. stocks and,
yes, that has been significant. I would argue, however, that the more dramatic
and potentially troubling theme is the recent decline in the U.S. Dollar.
(Note, simultaneously, the steep rise in the Euro and the British Pound.
The Swiss Franc has
been rising, as has the Japanese Yen).
I find the Barchart site helpful
in tracking all this. If you are a money manager, asset allocator, investment
bank, or sovereign wealth fund, there is no more direct way to vote for or
against an economy than through investment in (or divestment of) that country's
currency. The prospect of tariffs and layoffs, combined with the recent sense
of rapidly changing decision-making, may be undermining confidence in the U.S.
economy. The fall in Treasury yields accompanying the fall in the Dollar
suggests economic weakness and the eventual possibility of a cut in interest
rates from the Fed. See also the weakness in stocks sensitive to discretionary consumer
spending.
Friday in the charts.
The latest from Goldman’s prime brokerage
desk.
Fundamental
Headlines
The Economy
The stats last week turned positive though the primary
indicators weighed to the downside (one positive, two down). While this is more
or less a mixed outcome, it is clearly better than a fifth week of poor data. The
red light is still flashing but, at least, it hasn’t gone solid.
Adding (contributing) to this concerning
performance are a couple of Trump’s pet policies that point potentially at a slowdown/recession---(1)
federal employee layoffs and (2) tariffs---which while positive/necessary in
the long run will have a negative impact on economic growth short term.
The Risk Of A Recession Isn't Zero - RIA
Overseas, the numbers were negative but the pattern
there has more aptly reflected my ‘muddle through’ scenario lately than that of
the US.
There was no reported inflation stats.
Bottom line, I am clinging to my ‘muddle through’
economy but with a continuing firm conviction that inflation has seen its lows.
Overshadowing all of this is the Trump revolution
which keeps the level of uncertainty extremely high---adding to my lack of my
confidence in my forecast.
US
International
The January (preliminary) Japanese leading economic
indicators came in at 108.0 versus estimates of 108.4.
The January German trade balance was E16 billion
versus projections of E21 billion; January industrial production was up 2.0%
versus 1.5%.
Other
Friday in the economic charts.
https://dailyshotbrief.com/the-daily-shot-brief-march-6th-2025/
Latest Q1 nowcasts.
https://www.calculatedriskblog.com/2025/03/q1-gdp-tracking-mid-to-high-1-range.html
A deep dive into Friday’s nonfarm payroll
report.
https://bonddad.blogspot.com/2025/03/february-jobs-report-weak-employment.html
Overnight News
House Republicans announced a spending bill to
avert a government shutdown, daring Democrats to vote against it. Trump called
on Republicans to pass the bill, warning them to allow “no dissent” in their
ranks.
Mark Carney will lead Canada’s Liberal Party and
become the country’s next PM as Donald Trump’s trade policies fuel uncertainty.
The former central bank chief vowed to maintain retaliatory tariffs until
“Americans show us respect” and to make the nation an energy superpower.
China has introduced retaliatory tariffs
on about $22bn of US goods, including agricultural exports, targeting President
Donald Trump’s rural base in the latest escalation in the trade war between the
world’s two largest economies. Beijing’s measures, which were announced last
week in response to Trump slapping an additional 10% levy on all Chinese
products, are aimed primarily at US farm goods.
Monetary Policy
Powell’s
formal comments on Friday to an economic forum.
Update
on the Fed’s (thankfully) shrinking balance sheet.
Tariffs
Pushing
our neighbors away.
https://thedailyeconomy.org/article/tariffs-are-pushing-our-neighbors-and-prosperity-away/
Investing
The latest from Goldman’s trading desk.
The latest from BofA.
The latest from Lance Roberts.
Trump's Tariffs Spark Market Volatility -
RIA
The latest from Morgan Stanley.
Keep your political opinions away from your
money.
Stagflation and the Market.
https://assets.realclear.com/files/2025/03/2647_722b54a8-0164-488e-a062-de790877fb20.pdf
More on valuations.
The landscape in Trumptopia.
The recession trade is back.
Eight mistakes value investors make.
Recognizing the limits of
decision-making on investments.
https://www.polymathinvestor.com/p/bounded-rationality-recognizing-the
Time to be thinking about
bonds.
https://www.zerohedge.com/markets/credit-market-gyrations-are-dip-buyers-paradise
A gold stock bear.
https://talkmarkets.com/content/commodities/gold-stocks-fantasy-vs-reality?post=485636
Texas joins the rush to bitcoin.
https://www.zerohedge.com/crypto/texas-senate-passes-bitcoin-strategic-reserve-bill
News on Stocks in Our Portfolios
What I am reading today
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