The Morning Call
4/26/21
The
Market
Technical
As you can see,
the S&P had a see saw week, ending basically flat for the week and
recovering Thursday’s Biden tax plan driven sell off. Notwithstanding deteriorating technicals and
nosebleed valuations, my Market assumption remains: ‘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.’
Stock buybacks are
back.
https://www.axios.com/stock-buybacks-corporate-debt-1a989cee-91a6-49e4-933d-e4f3c27993cb.html
Peak growth will
limit S&P upside.
https://www.zerohedge.com/the-market-ear/cf4reg9-2a
The long bond continued its rally off the mid-March low. As I noted last week, more analysts are embracing the notion that any pop in inflation will be short lived and the longer term outlook is for a lessening in upward price pressure. As you know, my long term is for continued sluggish secular economic growth. Though I have been concerned that inflation could still raise its ugly head as a result of explosive monetary growth and unprecedented fiscal stimulus. I remain in that camp, but I am finding the counter argument increasingly persuasive.
https://www.zerohedge.com/the-market-ear/cpohx9wnzk
Like the S&P,
GLD had an up and down week. While it remains
in a very short term uptrend, it (1) failed to challenge its 100 DMA on the
upside and (2) is now poised to test that very short term uptrend on the downside. Follow through (either way).
Treasury yields
and gold.
https://www.zerohedge.com/markets/odd-couple-us-treasuries-and-gold-good-time-buy-both
The dollar had a
third tough week in a row. On Friday, it
started a challenge of its 100 DMA (now support); if it remains there through
the close on Tuesday, it will revert to resistance. It also broke its trend of higher highs and
higher lows. That suggests that
investors may be reevaluating the strength of the US economic recovery versus
that of the rest of the world---which may reflect the assumed impact of Biden’s
unfolding economic agenda.
Friday in the
charts.
https://www.zerohedge.com/markets/stocks-bonds-shrug-biden-battering-dollar-cryptos-tumble
Is the bitcoin liquidation over?
https://www.zerohedge.com/crypto/bitcoin-selloff-over-one-indicator-suggests-liquidation-behind-us
Fundamental
Headlines
The
Economy
Review of Last Week
US statistical releases
were positive again last week (the primary indicators were balanced) as the
February weather related weakened data fades into history.
Overseas, the data
flow was back on the positive side, driven largely by the positive flash PMI reports.
https://www.markiteconomics.com/Public/Home/PressRelease/7344c5db768b4d27a4174697c342ec50
The major economic
headline of the week was Biden’s new capital gains tax increase proposal---‘proposal’
being the operative word since I seriously doubt a tax increase that large will
make through congress. Nonetheless, some
sort of tax increase is likely; and I might add necessary, if even a fraction
of Biden’s spending proposals become law.
At the risk of
being repetitious, the irresponsible deficit spending of the Bush, Obama and
Trump administrations has grown the national debt to a level that it inhibits
economic growth. More deficit spending
is only going to make the condition worse, especially since a major portion of Biden’s
‘infrastructure’ projects are not infrastructure but more welfare. Reducing other spending would be the ideal
solution to the problem, but that is not going to happen. Doing nothing would be the worst
alternative. That leaves raising taxes
as the least bad option. And who better to pay the bill than the very wealthy
that has benefitted the most in the last decade from irresponsible monetary and
fiscal policies.
Bottom line. ‘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.’---which are only getting more irresponsible. (must read)
US
March
durable goods orders were up 0.5% versus estimates of +2.5%; ex transportation,
they were up 1.6%, in line.
International
Other
The Fed
Diminishing juice.
https://www.zerohedge.com/the-market-ear/cd6eowdryu
Bottom line.
Signs everywhere.
https://www.zerohedge.com/markets/signs-signs-everywhere
JP Morgan joins the bearish crowd.
News on Stocks in Our Portfolios
What
I am reading today
Analysis of Putin’s address to the Russian
Federal Assembly.
https://www.zerohedge.com/geopolitical/escobar-putin-rewrites-law-geopolitical-jungle
US
declares defeat in two more wars.
https://www.zerohedge.com/geopolitical/united-states-has-declared-defeat-two-more-wars
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