The Morning Call
3/7/22
I am travelling
tomorrow.
The
Market
Technical
The
Ukraine/Russia crisis and Powell’s congressional testimony notwithstanding, the
technical picture for the S&P didn’t change much last week. It remains in that narrowing range marked by
the lower boundary of its short term trading range and the downtrend off its
January 4th high. My conclusion is that the index is directionless
on a short term basis until one of those boundaries is successfully challenged.
It was an extremely
volatile week for the long bond; though it did manage to successfully challenge
the downtrend off its early December high and mark a new very short term higher
low. So, the chart suggests higher
prices at least in the short term which would reflect a weaker economic outlook
as well as a cowardly Fed---both of which seems reasonable to me.
Gold continues to
rocket to the upside on good volume.
However, it is nearing a zone of heavy resistance (horizontal black line
at the top of the chart); so, expect some slowdown in momentum. That is not to say that it won’t break to the
upside; it may just take a little work.
However, if it does, there is nothing standing in the way of
3000-4000/oz. Meanwhile, that huge gap
up open still needs to be filled.
Not surprisingly,
the dollar continues to lap the field.
There is nothing on the horizon that would suggest a weaker dollar. Although short term, it has to deal with two
gap up opens that need to be filled as well as the resistance offered by the
upper boundary of its short term uptrend. My assumption remains that
irrespective of what happens, investors continue to believe that the dollar is
a safe place to be.
Friday in the
charts.
https://www.zerohedge.com/markets/putin-panic-goes-global-stocks-puke-bonds-commodities-soar
Fundamental
Headlines
The
Economy
Review of last Week
The economic stats
were negative in total last week. However, the primary indicators were two to nil
to the positive. Overseas, the numbers were also negative.
It is now three weeks
in a row that the primary indicators performance has been upbeat while the aggregates
have been negative. I am not sure what
to make of that except that it clearly offers cognitive dissonance regarding
with my current economic outlook. However,
at the risk of being stubborn, I am not going to alter my forecast at this
moment---at least for another week: the economy
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) continued supply chain disruption as a
result of the conflict in Ukraine.
Speaking of which,
the Russian incursion into Ukraine again dominated the headlines. I continue to be amazed at (1) in
ineffectiveness of the Russian military [though whether deliberately or via
incompetence, its use of force has been considerably subdued when compared to the
US’s initial assault on Iraq or Afghanistan], (2) the willingness of the
Ukrainians to fight and (3) the solidarity and readiness of the EU and the rest
of the world to punish Putin and the Russians.
I linked to an article last week whose point was that geopolitical
forecasts are worse than economic forecast which themselves are generally worthless. I consider myself humbled.
https://www.nytimes.com/2022/03/02/opinion/putin-disinformation-social-media.html
Of course, that
just means the level of uncertainty is higher than everyone assumes---which is
good for neither the economy nor the Market.
US
International
Other
Q1 GDP growth
estimates continue to slide.
https://www.capitalspectator.com/us-q1-growth-estimates-continue-to-slide/
The thesis that
economic ties among nations spur peace is being tested.
https://www.nytimes.com/2022/03/04/business/economy/ukraine-russia-global-economy.html
The
Fed
Geopolitical risks could sideline the Fed.
https://www.advisorperspectives.com/commentaries/2022/03/04/geopolitical-risk-could-sideline-the-fed
Fiscal
Policy
America’s debt palooza.
Geopolitics
The ineffectiveness of the SWIFT sanctions.
Counterpoint.
https://global-macro-monitor.com/2022/03/03/markets-sometimes-do-the-work-that-armies-cant/
Bottom line.
Waiting for the
bear market that is already here.
https://blog.validea.com/waiting-for-the-bear-market-that-is-already-here/
Part two:
https://www.zerohedge.com/markets/world-war-global-recession-next-and-then-qe5
News on Stocks in Our Portfolios
What
I am reading today
The
problem with the diversity dividend.
https://quillette.com/2022/03/02/the-problem-with-the-diversity-dividend/
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