The Morning Call
12/4/23
The
Market
Technical
Nothing changed
from last week: The S&P moonshot continued last week. However, it is time to get a bit cautious:
(1) the S&P is closing in on the upper boundary of its short term trading
range [~4607] and (2) it still has those huge gap up opens below. I am not saying Sell; but I wouldn’t be
Buying until I know how the index handles the 4607 level or it closes those gap
up opens.
That said, as I note below, it appears that Market
consensus is now solidly in the ‘inflation in the rear view mirror’ camp which investors
short term are clearly interpreting positively.
However, on a longer term basis, much depends on the type of landing (economic
growth) that ensues. Until we have a
better sense of that I will continue on the sidelines.
The long bond had
a good week. It is (1) now challenging
its 100 DMA; if it remains there through the close on Tuesday, it will revert from
resistance to support and (2) about to challenge a year long downtrend [green line]. On the negative side, like the S&P, it
has gap up opens to fill. Still, with
the dovish vibes coming out of Powell on Friday, it is increasingly possible that
we have seen the lows (peak in yield).
GLD is in the
midst of a challenge of its all-time high.
I continue to believe that it’s likely that those gap up opens below
will act as restraint. So, I still see
no reason to jump into gold until it successfully challenges its all-time high
(the zone around the horizontal black line near the top of the chart). That said, it appears increasingly likely
that it will be successful. If so, I will
probably take a small trading position in GDX (the gold miners, which offer
more upside leverage).
Gold hits all time
high as Markets price in rate cuts.
Gold’s golden
cross.
https://www.zerohedge.com/the-market-ear/golds-golden-cross
The dollar had another see saw week ending slightly
higher. It bounced off its 100 DMA but
appears ready to mount another challenge this week. At the moment, it is still in short and intermediate
term uptrends, above its 100 and 200 DMAs and has the upward magnetic pull of
that huge gap down open. However, with
the lower inflation, lower interest rate narrative becoming more prominent, it
is easy to see a continuing drop in UUP.
Friday in the
charts.
The
chase for crap is on.
https://www.zerohedge.com/the-market-ear/crap-king
Fundamental
Headlines
The
Economy
Last Week Review
Last
week’s economic stats were quite positive but the primary
indicators were two plus, four neutral.negative
(two minus). The data (1) supported the
notion that inflation has seen its peak [at
least in the short to intermediate term] but (2) failed
to provide any clarification to my ‘I don’t have a
clue’ position on the issue of a Of course, it was a slow week for data; so, I
am not inclined to read too much into these numbers.
That
said, my outlook remains the same: (1) inflation is likely in the rear view
mirror, at least for the short to intermediate term, (2) I am sticking with my
‘I don’t have a clue’ outlook on economic growth---which is to say that I
remain in doubt as to whether we get a soft, no or hard landing.
Recessionary
Indicators Update. Soft Landing Or Worse? - RIA (realinvestmentadvice.com)
A
reassuring forecast from my favorite optimist.
https://scottgrannis.blogspot.com/2023/11/a-reassuring-outlook.html
That
said, I continue to believe that the more important economic
factor is the potential long
term impact of Longer term the issue
remains---a a grossly irresponsible fiscal policy
which if left unresolved will ultimately push interest rates and inflation to
higher levels and impede the economy’s ability to grow.
(must read).
Correcting that won’t be easy. It will take years of fiscal and monetary
restraint to do so. And that would mean less fiscal stimulus and interest rates
staying higher for longer than many now expect---which unfortunately is not apt
to happen.
https://brownstone.org/articles/the-destruction-of-the-american-middle-class/Correcting
that won’t be easy. It will take
years of fiscal and monetary restraint to do so. And that
would mean less fiscal stimulus and interest rates staying
higher for longer than many now expect---which
unfortunately is not apt to happen.
(This is an interesting discussion about the consequences of profligate
spending; but it is one of those ‘angels on the head of a pin’ arguments. The argument the author is trying to
discredit is that ‘high fiscal deficits are a problem that needs to be
addressed and the best way to do it is reducing the deficits [i.e., cutting
spending]’. The writer replaces it with
the argument that ‘high fiscal deficits needn’t be a problem if the Fed will
reduce interest rates’. But the only way
the Fed can reduce interest rates is by reducing inflation; and history says
that [i.e., tight money] causes recessions.
So in essence, this author is arguing forget about lowering spending,
let’s just have a recession.)
The other issue that
could start to come into play is the political
division this country. 2024 is an election year; the
dems have a passionate dislike for all things Trump and
have to date (whether you agree with it or not) actively worked to indict,
prosecute or otherwise prevent Trump from
running in this election. I doubt those efforts will diminish. Indeed, they will likely be redoubled given
their own fear of retribution should Trump win. On the other side, it
seems likely that Trump and allies will up the ante in
combatting the perceived persecution efforts of the
dems.
I
don’t think this is fertile ground for improved economic
policy; and it is far more likely that
the opposite could happen. I am not trying to assume the role of a Cassandra
here. But I fear that will become a much
greater factor than many believe in not only economic
policy but also domestic social policy and foreign
policy. Let’s hope
I am dead wrong.
https://www.zerohedge.com/political/rogan-democrats-have-no-cards-play-2024-except-imprisoning-trump
The
Economy
US
International
The October German trade balance was E17.9 billion
versus estimates of E17.1 billion.
Other
Civil Strife
Brace
yourself for what is coming in 2024.
Bottom line
Looser
financial conditions are a problem for the Fed.
Looser Financial Conditions Are A Problem For The Fed
- RIA (realinvestmentadvice.com)
The coronavirus
Just admit that you were wrong.
https://www.zerohedge.com/markets/just-admit-you-were-wrong
Bottom line
The latest from
BofA.
https://www.zerohedge.com/markets/hartnett-buy-signal-triggered-mid-october-ended-last-week
News on Stocks in Our Portfolios
What
I am reading today
What archeology is telling us
about Jesus.
What
archaeology is telling us about the real Jesus (nationalgeographic.com)
Monday
morning humor.
*****************************************************************************
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