The Morning Call
1/3/22
The
Market
Technical
As
it did so many times in 2021, the S&P successfully challenged the upper boundary
of a short term trading range, resetting to an uptrend. There is the possibility
that this could be a false breakout fueled by a Santa Claus rally. However, for
the moment, I think that we have to assume that the bulls remain in charge and
the direction is up.
While the long
bond has trended downward over the past two weeks, it remains (1) in very short term uptrends off its March
and October lows as well as in intermediate and long term uptrends and (2)
above both DMA’s, having unsuccessfully challenged its 100 DMA. This is
supportive of the notion that inflation will not be the problem many think but
rather it is that ‘Powell waited too late to get hawkish and
now the Fed will be tightening into a weaker economy---thereby making it even
weaker.’
GLD maintained its upward bias over the last two weeks. In the process, it (1) challenged both of its DMA’s, both unsuccessfully during last week and (2) remained within the narrowing pennant formation [two straight red lines]. I noted in the last Monday Morning Chartology that its pin action is suggesting higher inflation while those of the long bond and the dollar do not. That is still the case though with gold a touch higher and the long bond and the dollar a bit lower, it is less so.
The dollar drifted
lower over the last two weeks but remains solidly in its short term uptrend and
above both DMA’s. So, I don’t see any inflation fears in its price performance.
What
is bothersome to me is these charts are suggesting that the Fed has timed the
tapering perfectly, that is, soon enough to slow the growth of inflation with
just enough tightening to assure continued economic strength. As you know, I am
coming around to the notion that inflation may be at or near its peak but not
because of anything positive that the Fed is done. Indeed, I believe that if it
is peaking, it is because the enormous burden that irresponsible money and
fiscal policies have placed growth prospects for the economy. In short,
inflation may not prove an enduring problem but a struggling economy made worse
by tightening monetary policy could be.
Friday in the
charts.
https://www.zerohedge.com/markets/stocks-bonds-bid-musk-mulls-imminent-recession
Fundamental
Headlines
The
Economy
Review of the Week of
12/20
The US stats weighed
to the positive side as did the primary indicators (three plus, two neutral and
one negative). Overseas, the data were overwhelmingly negative for the third
week in a row.
Review
of the Week of 12/27
This week was dead.
In the US there were only nine datapoints (no primary indicators) and they were
evenly split. Overseas, it was even quieter. Only two indicators---one plus,
one minus.
My take on the economy
remains unchanged---it is struggling to grow, hampered by irresponsible
monetary and fiscal policies, getting no support from the global economy and
threatened by (1) seemingly mounting inflationary forces and (2) a more severe than
anticipated retreat in economic activity---the result of the Fed that likely waited
too long to start tightening.
$29 trillion and
counting.
https://compoundadvisors.com/2021/29-trillion-and-a-change-in-the-american-psyche
US
International
The final December
German manufacturing PMI came in at 57.4 versus estimates of 57.9; the final
December EU manufacturing PMI was 58.0, in line.
Other
News on Stocks in Our Portfolios
What
I am reading today
Are
we that virtuous?
https://www.zerohedge.com/political/ungracious-and-their-demonization-past
New images from Mars.
War with Russia. Really?
https://www.zerohedge.com/geopolitical/david-stockman-prospect-world-war-iii
Visit Investing
for Survival’s website (http://investingforsurvival.com/home)
to learn more about our Investment Strategy, Prices Disciplines and Subscriber
Service.
No comments:
Post a Comment