The Morning Call
10/4/21
The
Market
Technical
The S&P
continued its downtrend off the September 2nd high (bad news). However, the moonshot on Friday negated
Thursday challenge of its 100 DMA (good news).
As you can see, that is the second bounce off that DMA. This all leaves me with directional uncertainty. Patience.
https://www.zerohedge.com/markets/bank-america-only-other-time-happened-was-recession-2000
The long bond also
had a lousy week and also rallied on Friday.
While not enough to reverse its 100 DMA’s Thursday reversion to resistance,
it did negate last Tuesday’s challenge of its 200 DMA. Again, directional
uncertainty, though TLT’s downtrend seems a bit more solid than the S&P.
GLD was up slghtly on the week, which means its
technical position is unchanged: ‘While GLD remains in a downtrend off its
August 2020 high and has reset both DMA’s to resistance, it remains in uptrends
across all timeframes. In other words,
the short term trend is clearly down, the long term trend is clearly up’. Until at least one uptrend is broken, my
assumption is that the bias is to the upside.
While the dollar
experienced a mild retreat on Thursday and Friday, it is still in a firm rally,
continuing the upward bias off the January/May double bottom and remaining
above both DMA’s. I see no reason to
doubt more upside.
https://mrzepczynski.blogspot.com/2021/09/currency-trading-making-comeback.html
Historically, gold
and the dollar trade inversely, i.e., if the dollar is down, gold is up and vice
versa. Meaning longer term, one of them
should reverse its uptrend.
Friday in the
charts.
The hidden trade.
https://www.zerohedge.com/markets/big-trade-hidden-under-surface
Fundamental
Headlines
The
Economy
Review of Last Week
The US data
releases were solidly negative and the primary indicators were tilted negative
(one positive, two negative and one neutral).
So, struggling growth remains my characterization of the economy. Overseas, the numbers were slightly positive. A plus to be sure; but the overall trend is
flat to down---so, no help for the US.
Two items worth
mentioning. First is the congressional
cat fight over the debt ceiling, funding the government, the $1.5 trillion infrastructure
bill and the $3.5 trillion giveaway to the democratic base. So far, the news is mildly upbeat. The government can remain in business through
December. And Joe Manchin is holding out
for a smaller giveaway bill ($1.5 trillion).
If it is Washington as usual, he will get ‘bought off’ with some extra
perks for West Virginia (and himself?) and the taxpayer will get saddled with the
‘compromise’ sum. The only hope is that
the progressives refuse to compromise and nothing passes. Stay tuned.
Second is the
announcement by Merck that it is applying to the FDA for a treatment for Covid,
which has produced stunningly positive results in clinical trials. If this drug is as effective as billed, this
could hopefully lead to an end of this government induced nightmare the electorate
has been subjected to, get people back to work and factories running again.
Both of the above have
the potential to be major pluses for the economy in a cyclical sense. Regrettably, they won’t address the long term
secular problems impacting economic growth and, hence, they won’t solve the issue
of gross asset overvaluation.
Bottom line. ‘…
following an initial snapback (which appears to be over),
the US economy will likely return to its former subpar secular growth rate,
stymied by an irresponsible mix of fiscal/monetary
policies.’
More Q3 GDP growth downgrades.
https://www.calculatedriskblog.com/2021/10/q3-gdp-forecasts-more-downgrades.html
US
International
Other
Energy crisis worsens in Europe.
The
Fed
This latest
internal Fed study illustrates what we already knew---the Fed doesn’t have a
clue how monetary policy works. The
problem is that the Fed also knew it and persisted in following policies that hadn’t
and weren’t working, insisting publicly that it did know what it was doing.
https://www.nytimes.com/2021/10/01/upshot/inflation-economy-analysis.html
Inflation
A closer look at August inflation numbers.
https://econbrowser.com/archives/2021/10/measured-inflation-in-august
The case for debt (and wealth) destruction.
https://www.advisorperspectives.com/commentaries/2021/10/01/why-much-wealth-must-be-confiscated
White House admits inflation will stay higher,
longer.
Bottom
line
Stock, bond and
real estate prices are all uncomfortably high.
https://www.nytimes.com/2021/10/01/business/stock-bond-real-estate-prices.html
The
latest from Morgan Stanley.
https://www.zerohedge.com/markets/morgan-stanley-tapering-tightening-and-dip-buying-starting-fail
News on Stocks in Our Portfolios
What
I am reading today
The
earth may be a victim of an early planetary hit and run.
Crickets?
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website (http://investingforsurvival.com/home)
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