The Morning Call
4/18/22
The
Market
Technical
After
a second gap down open on Monday, the S&P churned last week. However, it (1) successfully challenged its
200 DMA, resetting it to resistance and (2) remained in a very short term downtrend
off its 3/29 high. I am not suggesting disaster lies ahead; after
all, it is still a long way from the lower boundary of its short term trading
range and any Fibonacci retracement levels. But currently the momentum is down.
Goldman
sells billions in stock.
https://www.zerohedge.com/markets/goldman-quietly-sells-billions-stocks-third-quarter-row
The long Treasury
continued its rout. I noted last week
that the lower boundaries of its short term downtrend and intermediate term
uptrend should offer support and that, at least, some backing and filling
seemed likely. Nope. It blew through both
like s**t through a goose. Clearly, the
bond guys aren’t buying the ‘peak inflation’ thesis being currently pushed by
some opinion leaders. As always, my bet
is with the bond guys. That said, given
the hefty distance between TLT’s current price and the lower boundaries of both
its newly reset intermediate term trading and its long term uptrend, prices
could go a good deal lower without totally breaking down.
Gold had another
good week though I am not sure if it was because its investors were, like the
bond guys, shrugging of the ‘peak inflation’ happy talk from the stock crowd or
because they believe it and assume that any Fed tightening will be short lived.
Whatever the thinking, 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.
More
breadth.
https://www.zerohedge.com/the-market-ear/ckdeeygsfi
Individual
investor sentiment the lowest since 1992.
https://www.bespokepremium.com/interactive/posts/think-big-blog/bespokes-morning-lineup-4-14-22-whoa
So, is the pain
trade higher?
https://www.zerohedge.com/the-market-ear/c5xvyurssi
The growth in
corporate profits versus the growth in wages.
https://www.zerohedge.com/markets/yes-it-different-time
Fundamental
Headlines
The
Economy
Review of last Week
Last week the
economic data were sparse and mixed with one primary indicator positive and two
mixed. Overseas stats were also mixed.
So, the numbers,
what there was of them, continued 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) inflationary forces and
(2) continued supply chain disruptions because of the conflict in Ukraine.
US
The preliminary
April consumer sentiment came in at 65.7 versus estimates of 59.0.
International
Q1 Chinese GDP
growth was +1.3% versus forecasts of +0.6%; YoY industrial production was +5.0%
versus +4.5%; YoY retail sales were -3.5% versus -1.6%; YoY fixed asset investments
were +9.3% versus +8.5%.
Other
Small
businesses are not that optimistic
https://www.linkedin.com/in/edward-yardeni/recent-activity/
Higher rates starting to impact housing.
https://finance.yahoo.com/news/economic-shock-hitting-housing-market-075627914.html
The EU takes another self-destructive step.
The
Fed
How important to the US is the Bank of
Japan’s monetary policy?
https://www.russell-clark.com/p/why-is-japan-so-important?s=r
What does a successful Fed policy look like?
https://www.themoneyillusion.com/what-does-successful-fed-policy-look-like/
The Fed’s new policy is disengaging its prior
volatility suppression policy.
https://www.zerohedge.com/markets/fed-just-disengaged-its-volatility-suppression-machine
Fiscal
Policy
A deeper look into the recent federal budget
numbers.
https://scottgrannis.blogspot.com/2022/04/tax-revenues-soar-spending-still-in-la.html
Inflation
Dissecting PPI.
https://econbrowser.com/archives/2022/04/will-the-true-ppi-stand-up
Recession
From Larry Summers on the probability of
recession.
Bottom line
Risk/reward in a
Fed rate hiking cycle.
https://mailchi.mp/verdadcap/risk-reward-in-a-hiking-cycle?e=6a3b6a5c9b
On concentrated
positions.
https://alephblog.com/2022/04/12/on-concentrated-positions/
News on Stocks in Our Portfolios
What
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