Monday Morning Chartology

 

The Morning Call

 

4/5/21

 

The Market

 

    Technical

 

 

The S&P followed a similar pattern as in the prior week, starting on its back foot  but ending on a very positive note.  However, this time it closed at an all-time high; if it remains above that level through the close on Tuesday, it will reset its short term trend from a trading range to an uptrend.  My Market assumption remains: ‘while valuations continue to reach historical extremes, I can’t see an end to this uptrend as long as the money keeps flowing with abundance and in the absence of any major negative exogenous event.’

The long bond had a rough week except for Thursday.  However, that rebound resulted in setting a higher low which builds the case for the lower boundary of its short term trading range having some strength and perhaps even establishing a bottom.  But that is getting ahead of ourselves.  For now, it seems that the worst is over for TLT, at least in the short term.  I continue to believe that its current price performance is and will be reflective of investor bets on inflation.

 

 

 

GLD showed a little life last week, setting a slightly higher low on Tuesday and starting a challenge of a very, very short term downtrend on Thursday.  Follow through.

 

 

 

 

The dollar continued its slow recovery and, indeed, successfully challenged and reset its 200 DMA from resistance to support.  Although as you can see, it ended the week hovering over that MA and looking like it wants to have a go at breaking back below it.  As I have noted, this progress is likely a function of the US being well ahead of most of the world in its coronavirus economic recovery.  

https://www.zerohedge.com/the-market-ear/cpdrs7kum2

 

 

 

Friday in the charts.

                https://www.zerohedge.com/markets/stocks-bonds-bullion-black-gold-bid-q2-starts-dollar-dump

 

                Hedge funds feeling the pain.

            https://www.zerohedge.com/the-market-ear/hedgefunds

 

 

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        Review of Last Week

 

US statistical releases were evenly matched last week, though the primary indicators were positive (two plus, zero minus).  Of course, as the dataflow works through February results, improvement is to be expected.  So, no reason to question the ongoing recovery.

 

Overseas, the data flow continued quite positive, supporting the notion that the rest of the world’s economies are also recuperating.

 

Bottom line. As I have tried to highlight, the issue isn’t whether or not the US (world) economy is rebounding, the issue is its magnitude and duration.  As you know my opinion is that following an initial snapback, the US economy will likely return to its former subpar secular growth rate, stymied by irresponsible mix of fiscal/monetary policies.

 

                        That is not an idle concern.  All one has to do is look at the performance of            Japanese’s economy to understand the basis of my thesis (must read).

                          https://www.zerohedge.com/economics/japans-economy-again-struggling

 

However, as I noted last week, there is the possibility that Biden’s new infrastructure plan could put the economy on a path to a higher secular growth rate---IF the spending is directed at productivity enhancing investments (as opposed to income redistribution) AND it is paid for via taxes (as opposed to more debt).  Those are pretty big ‘if’s’ and ‘and’s’ when you consider the fiscal policy record of our current ruling class.  So, I am not jumping for joy right now.  However, the initial narrative on this plan sounds like it incorporates enough productivity enhancing infrastructure spending and higher taxes so that it could produce the desired results (higher secular economic growth).  Trust but verify.

 

                        Now starts the cognitive dissonance.

                        https://www.zerohedge.com/political/biden-infrastructure-bill-includes-20-billion-destroy-highways-being-racist

 

 

                                US

 

                        International

 

 

 

Other

 

                          Expect a high hike in economic activity in April.

                          https://www.zerohedge.com/economics/goldman-jpm-expect-econ-activity-april-may-top-anything-well-see-our-careers

           

                        Biden’s Plan

 

                          From the Washington Examiner.

                          https://www.washingtonexaminer.com/opinion/ready-or-not-here-comes-bidens-infrastructure-push

 

                                  From Investors Business Daily.

                          https://www.investors.com/news/why-biden-infrastructure-plan-tax-hikes-may-be-sp-500-wake-up-call/

 

               

         News on Stocks in Our Portfolios

           

What I am reading today

           

            How rich was Cleopatra?

            http://climateerinvest.blogspot.com/2021/03/cleopatra-was-worth-96-billion.html

 

                Russian tanks move into Ukraine (read)

            https://www.zerohedge.com/geopolitical/russian-tanks-move-toward-ukraine-globe-braces-world-war-3

 

                Cryptos surge.

            https://www.zerohedge.com/crypto/cryptos-near-2-trillion-market-cap-bitcoin-ethereum-surge-above-key-levels

 

Quote of the day.

https://cafehayek.com/2021/04/quotation-of-the-day-3483.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CafeHayek+%28Cafe+Hayek%29

 

 

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