The Morning Call
10/25/21
The
Market
Technical
The S&P had a another
good week, closing above the upper boundary of its short term trading range on
Thursday. But it failed to hold above it on Friday which leaves it in that
trading range. Clearly the $64,000
question is, will it successfully challenge that boundary? Stay tuned.
The long bond was
down on the week but not without a lot of action. (1) it traded below its 200 DMA for three
days, then closed right on it on the fourth.
That doesn’t negate the challenge but it does extend it for a day. Follow through, (2) it made a higher low
[which is good news] but only after making a lower high---setting up a potential
pennant formation. So, like stocks, TLT
is at/near a crossroads.
The bond market is
waking up.
https://scottgrannis.blogspot.com/2021/10/the-bond-market-is-waking-up.html
It appears that GLD had finally found some life after
four months in a downtrend. On Friday it
finished (1) above its 100 DMA [now resistance]; if it remains there through the
close on Tueday, it will revert to support, (2) above its 200 DMA [now resistance];
if it remains there through the close on Wednesday, it will revert to support, and (3) above the aforementioned downtrend. If it remains there through the close today,
it will negate that trend. Looking
ahead, if gold continues to advance along with stocks and bonds, it suggests
that investors are not worried about higher inflation. Let’s see how this pin action plays out.
For the second week
in a row, the dollar gapped down on Monday, then traded only slightly down for
the rest of the week. However, it
remains in an uptrend off its May low and above both DMAs. So, its bias remains to the upside which
would fit the economic growth, transitory inflation scenario seemingly being
discounted in stocks, bonds and gold.
Friday in the
charts.
Technically
speaking.
https://www.zerohedge.com/markets/stocks-surge-earnings-roll-risk-gone
Fundamental
Headlines
The
Economy
Review of Last Week
The US data
releases were negative including the primary indicators (three negative, one
positive). So, struggling growth remains
my characterization of the economy now and into the future. Overseas, the numbers were negative again--so,
no help for the US.
Last week’s data perfectly
illustrates the corner into which the Fed has painted itself, i.e., slowing
growth, rising inflation. The question is,
given the disappointing growth numbers, will the Fed now crawfish on its hinted
at December reduction in QE?
I guess not.
https://www.zerohedge.com/markets/stocks-bonds-bitcoin-slammed-powell-confirms-taper-timeline
Bottom line: growth
isn’t going to pick up because the economy is burdened with increasingly irresponsible
monetary and fiscal policies; and continuing liquidity infusions will only aid
inflationary forces.
US
The September Chicago
Fed national activity index was -.13 versus +.05 in August.
International
The August Japanese
leading economic indicators came in at 101.3 versus 104.1 in July.
The October German
business climate index was reported at 97.7 versus estimates of 97.9.
Other
So much
for strong demand.
https://www.zerohedge.com/markets/poor-americans-credit-card-usage-spikes-their-savings-run-out
While holiday
spending may be up this year, the overall picture is not that positive.
The
Fed
Get the Fed out of the stock market.
https://www.pragcap.com/get-the-fed-and-government-out-of-the-stock-market/
Rising anticipation among investors for earlier
than expected rate hikes.
I repeat. The Fed
has never, ever transitioned from easy to neutral monetary policy successfully.
https://www.zerohedge.com/economics/day-late-dollar-short-feds-coming-policy-mistake
Fiscal
Policy
Oh yeah, this is a
sure winner (not).
https://www.zerohedge.com/political/pelosi-confirms-wealth-tax-billionaires-unrealized-gains-way
Inflation
Jeffrey Snider argues that QE is not a cause
of inflation.
The inflation catch up game.
https://www.advisorperspectives.com/commentaries/2021/10/22/the-inflation-catch-up-game
Get ready for what is coming.
Edible oil prices hit record high.
https://www.zerohedge.com/commodities/edible-oil-prices-hit-record-high-food-inflation-treat-soars
Potential shortages coming in rare earth metals.
Europe’s coming
magnesium shortage.
https://www.zerohedge.com/commodities/millions-jobs-risk-europe-hit-magnesium-shortage
The
coronavirus
More on the NIH role in the Wuhan lab coronavirus
experiments.
News on Stocks in Our Portfolios
What
I am reading today
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