The Morning Call
6/27/22
The
Market
Technical
The S&P failed
in its challenge of the lower boundary of its intermediate term uptrend,
bouncing hard and demonstrating the powerful pull of those two huge gap down
opens. It managed to fill one of those gaps; and still has plenty of room the
close the second before it even challenges its very short term downtrend
(~4043). Remember that some of the most spectacular rallies occur in bear
markets. So, I still think it too soon to get jiggy.
Will $30 billion
in month end pension money send stocks higher?
The first real buying
in three weeks.
The long bond
tried a second challenge of the lower boundary of its intermediate term trading
range and failed again. That said, it still has a lot of work to do to gain any
kind of upward momentum. But with investors now more concerned about recession
than inflation, the worst is likely over.
GLD is making its third attempt to challenge the lower boundary of its very short term uptrend. Since gold is usually inversely correlated to yields (yields down, gold up), I am watching TLT for guidance on gold. As I noted above, the worst may be over for the long bond (yields rallying); and if so, then GLD should hold its very short term uptrend.
The
story remains the same. No matter how badly everyone wants the dollar to go
down, as long as the globe looks at the US as the safest place to invest, the uptrend
is not apt to change.
Friday in the
charts.
https://www.zerohedge.com/markets/stocks-soar-markets-price-end-fed-rate-hikes-recession-looming
Weekend
in the charts.
https://www.zerohedge.com/the-market-ear/forwardlooking
Commodities continue
to weaken.
https://www.zerohedge.com/the-market-ear/cbg8px30as
Goldman on the
near term Market direction.
Fundamental
Headlines
The
Economy
Review of last Week
Last week didn’t
produce a lot of economic data; what there was negative, though there were two
upbeat primary indicators. Overseas stats were quite negative.
The major headlines
of the week were:
(1)
Powell’s testimony before congress in which he reiterated
that the Fed’s primary goal at this time is to bring inflation down. The markets
called bulls**t on him as they are now discounting a recession and an early end
to tightening.
(2)
The bank’s passed their annual stress test with
flying colors. The importance of this is that when, as and if recession comes,
they will be able to manage it with little difficulty, meaning a 2008/2009
credit crisis is very unlikely.
As you know, I
originally thought that the US could avoid a recession (because the Fed would
chicken out before any economic deterioration got too bad), then went to a
neutral stance as the data got worse. And as they got even worse, I gave up the
ghost and acknowledged that a recession was the most likely scenario unless the
Fed quickly turns tail and runs back to QE which does not seem likely---barring a
500-1000 point flush in the S&P in the near future. (remember the Fed cares
as much about the Market as it does about the economy).
US
May durable goods
orders rose 0.7% versus estimates of +0.1%;
ex transportation, they were up
0.7% versus +0.3%.
International
The April Japanese leading economic indicators
came in at 102.9, in line.
Other
The chaos of the
post pandemic US economy.
https://brownstone.org/articles/the-spasmodic-chaos-of-the-post-lockdown-us-economy/
The Fed
Another gem from our ruling class.
Recession
Forget inflation, it’s a recession, stupid.
Part 2.
https://www.ft.com/content/d572994d-f692-4de1-9bd4-1e8a3326a307
Recession risk rising.
Geopolitics
The root causes of the Russia/Ukraine
conflict.
Bottom line.
EPS growth
projections coming down.
https://www.zerohedge.com/the-market-ear/cwokes1img
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