The Morning Call
4/11/22
The
Market
Technical
The
S&P was off last week, mostly on the prospects of a tighter than expected monetary
policy. In the process, it managed to reset its 100 DMA to resistance, having
just reset to support the prior week. That said, the pin action could have been
a good deal worse. The index challenged its 200 DMA, then bounced enough to not
only negate the challenge but also fill Wednesday’s huge gap down open. However,
it ended the week on its back foot with another challenge of its 200 DMA. Follow
through.
The long Treasury’s
reaction to the Fed news was more pronounced than that of equities---it headed straight
down and didn’t look back. It is now near a challenge of the lower boundaries
of both its intermediate term uptrend and short term downtrend---each should offer
some support. Plus, there are still three gap down opens overhead that need to
be filled. A bounce or at least some backing and filling seems likely.
Gold had a decent
week, shrugging off all the higher interest rates talk. It even appeared to
have broken to upside out of a developing pennant formation. That lends support
to equity investors take that any Fed tightening will be short lived. Of
course, I am much more respectful of the bond market’s interpretation of the
future than those of the stock/gold markets. So, I wouldn’t get too jiggy short-term.
On the other hand, longer term, GLD is in uptrends across all timeframes and
above both DMAs. So, until something breaks, the assumption is that the long
term trend remains to the upside.
Nothing
has changed. The dollar’s chart continues to be the healthiest of the lot. 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/bonds-stocks-battered-hawkish-fed-flexes-europe-panics
Institutional
selling has been relentless.
Fundamental
Headlines
The
Economy
Review of last Week
Last week the
economic data were overwhelmingly negative (no primary indicators). Overseas
stats were slightly to the positive side.
So, the numbers
continue to validate my outlook: the
economy is struggling to grow (but no recession), 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 disruptions because of the conflict in Ukraine.
In other news, the
Fed released the minutes of its latest FOMC meeting which were quite hawkish,
pointing to a faster runoff of its balance sheet and as well as a more rapid
rise in the Fed Funds rate. Though the Market did experience a two day selloff,
it wasn’t that dramatic indicating that equity investors didn’t appear all that
concerned. On the other hand, the bond crowd uninverted the yield curve(s)
which supports my notion that the Fed will chicken out and start easing much
sooner and at lower rate levels than suggested in their communique.
SocGen agrees.
Jeffrey Snider
thinks that the whole discussion is meaningless.
US
International
February UK GDP grew
+0.1% versus expectations of +0.3%; the February balance of trade was L-9.2
billion versus L-11.5 billion; February industrial production was down 0.6%
versus +0.3%; February manufacturing production down 0.4% versus +0.3%.
Other
Is today’s energy shortage worse than 1970’s
oil shock?
https://www.zerohedge.com/energy/todays-energy-shortage-worse-1970s-oil-crisis
Inflation
Food prices soaring.
JP Morgan warns of imminent acute agricultural
supply shock.
Higher interest rates are starting to impact
housing prices.
Oil price slides as Chinese lockdown escalates.
https://www.zerohedge.com/energy/oil-tumbles-near-pre-invasion-lows-china-lockdowns-escalate
Bottom line
The math of a
drawdown.
https://www.zerohedge.com/the-market-ear/catusmwaal
The latest from
Wall Street’s biggest bear.
News on Stocks in Our Portfolios
What
I am reading today
There
is a negative in every positive.
https://ritholtz.com/2022/04/the-b-side/
The Defense Department releases 1500
pages of classified information on UFO’s.
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