The Morning Call
4/3/17
The
Market
Technical
The
S&P remains in a very short term downtrend, having made a second lower
high. That is not likely a sign of a top
at least as long as it holds its moving averages and the lower boundary of its short
term uptrend. Both are still a ways
away.
The
long Treasury has touched a minor resistance level four times and was unable to
break to the upside. On the other hand,
it has managed to trade above its 100 day moving average. A move above that resistance level would
suggest that the bond guys are more worried about recession than inflation; a
move below the 100 day moving and especially the lower boundary of its short
term trading range would probably confirm the current accepted Trump-flation
scenario.
GLD
is trying to move up, but can’t successfully challenge its 100 day moving
average. The good news is that it has put
its 200 day moving average behind it.
Still it won’t be out of the woods until it takes out the 100 day moving
average.
The
dollar had a good week but still isn’t acting like it believes that the Fed is
tightening, the economy is strong and Trump’s fiscal program is going to be
successful.
The
VIX ended the week well above the lower boundary of its very short term uptrend
and its 100 day moving average. It remains
below its 200 day moving average and in a short term downtrend. The question is still open as to the level of
complacency.
Fundamental
Headlines
Last week’s aggregate
data was evenly divided as were the primary indicators; hence, in the last 78
weeks, twenty-five were positive, forty-three negative and ten neutral.
My bottom line is that while the
economy has been stabilizing, it is not improving as many would have us
believe. I believe that the risk is a
weaker economy rather than a stronger one (higher inflation and higher interest
rates).
Overseas,
the dataflow continues upbeat, strengthening the case that this forecast will
go from ‘muddle through’ to improvement.
***overnight,
the March Japanese and Chinese manufacturing PMI’s were up but below estimates;
the March EU countries manufacturing PMI’s were above expectations.
In
politics, the Donald’s has maintained his deregulation efforts. As you know, I think that this is a plus for
the economy; and if we avoid another weakening in activity, it will likely be
the result of declining regulations and an improving global economy. On the other, Trump seems at war with the
Freedom Caucus, blaming them for the lack of success of the repeal and replacement
of Obamacare. I think that is a big
mistake because (1) their objections to healthcare bill as it was written were
valid [in my opinion] and (2) these guys were a major contributor to his
efforts at election. Pissing them off
and making overtures to the dem’s is not the answer to successfully
implementing his fiscal program.
On
trade, the announcements this week with respect to desired changes in NAFTA and
the relations with other trading partners were much more subdued (reasonable)
than Trump’s rhetoric, reinforcing the notion that all his shouting and
screaming were just negotiating points.
If that is true (and we certainly don’t know that yet), then his
positions of trade are not the negative that I have been so worried about.
The
Fed pounded us with speakers last week.
Some sounding dovish, some hawkish.
In other words, business as usual; usual being, not committing to any
course since they don’t know which course to take. My fear is that it continues its lame
tightening program just as the economy starts to weaken---which historically
speaking would be par for the course.
Bottom
line: I am unimpressed with the dataflow.
I applaud Trump’s deregulation efforts and his first formal position on
trade, but believe that he needs to tone down the rhetoric if he wants to get
his fiscal program enacted. The Fed
remains a liability to the economy and more importantly to the Markets.
Investing for Survival
Five
questions every buyer should ask.
News on Stocks in Our Portfolios
Economics
This Week’s Data
Other
Politics
Domestic
International War against Radical
Islam
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment