The Morning Call
7/10/17
The
Market
Technical
No
real changes in trend in the S&P while I was gone.
The
long Treasury is having some trouble. It
closed below its 200 day moving average last Thursday (if it remains there
through the close on Tuesday, it will revert from support to resistance) and the
lower boundary of its very short term uptrend on Friday (if it remains there
through the close today, the trend will be voided).
Gold
continues to be unable to get out of its own way. Of course, higher yields didn’t help.
The
dollar is also having problems. Usually
rising rates help the dollar---or vice versa.
The
VIX was a bit more volatile last week; but remains at a very subdued level.
Fundamental
Headlines
The overall economic
data the week of June 26 was negative though the primary indicators were a plus. I score it a neutral. The week of July 3 the stats were mixed but
the primary indicators were quite negative.
I score it a negative. In the
last 91 weeks, twenty-eight were positive, fifty negative and thirteen neutral.
Not
much occurred on the political front.
The senate continues unable to pass healthcare reform. However, there was a positive headline on
trade out of the G20 meeting.
On
the monetary policy, the Fed remains slightly on the hawkish side, suggesting
that it was never data dependent. The
ECB took a page from the Fed playbook, sending out both dovish and hawkish
statements.
Bottom
line: the numbers continue to suggest a weak if not faltering economy. The only one helping fiscal policy is
Trump. And the Fed has already failed
(once again) in returning monetary policy to normal on a timely basis. The only
question is what price the economy and asset prices will pay.
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