The Morning Call
1/2/24
The
Market
Technical
Over the prior two
weeks, the S&P continued its relentless upward momentum---until the last
moment. As you can see, it made it to the final trading day of the year, almost
made it to its all-time high then fell out of the moonshot that started in late
October. That is not to suggest that the rally is over; but the S&P may
need a rest following such a powerful move.
Seasonality would
indicate further upside; but the resistance posed by the all-time high and
those multiple gap up opens down below say otherwise. My focus is on how the
S&P handles the all-time high.
No caution signs.
https://www.zerohedge.com/the-market-ear/dangerously-bullish-no-caution-signs
Like the S&P,
the long bond maintained its push to the upside. Unlike S&P, it isn’t
showing any signs of rolling over. All three DMAs are now support; and there is
no visible resistance except at higher levels. It is too soon to make the call;
but a faltering S&P and a rising long bond points to recession.
GLD continues to be
unable to push through its all-time high. Until it does so, I see no reason to
be invested here.
Dollar investors
clearly didn’t like the ‘Fed pivot.’
While the long term uptrend remains in place, the dollar’s short term
technical picture has been wrecked. To be sure, a gap down open of the order of
magnitude shown on the chart begs to be closed. But that will likely take a
long time. Expect a lot of directionless trading over the short to intermediate
term.
2023 in the
charts.
Fundamental
Headlines
The
Economy
Week of 12/18 Review
Stats were upbeat
both is the US and abroad. The US primary indicators were mixed to slightly positive:
five plus, one neutral, four minus. The most important aspect of these numbers
being a steady decline in inflation---which will likely continue, at least for
the short term.
On the other hand,
the more negative growth indicators leaves me still uncertain as to whether the
coming landing is soft, hard or we have no landing at all. As you know, there
is a growing consensus for the soft scenario.
Week
of 12/25 Review
It was a quiet
week on the stat front. What there was, was mixed. So nothing to alter my outlook.
(1)
I think that the inflation risks are behind us, at
least for the short term. However, longer term, I believe that the most
important economic factor is the potential [inflationary] impact of a grossly
irresponsible fiscal policy which if left unresolved will ultimately push
interest rates and inflation to higher levels, risking a tighter monetary
policy and impeding the economy’s ability to grow.
(2) The question of
recession [what kind of landing] remains open, in my opinion. There simply isn’t
enough consistently upbeat data to warrant the assumption of a soft [no] landing.
Not that that won’t occur; it is just not yet in the numbers. But I will take
it a step further. I still think that there is a decent chance of a
recession---or something worse than current Market expectations. Why? Recessions
historically begin after the yield curve uninverts. Right now it remains
inverted. Pay attention to the normalization of the curve.
US
International
The December German
manufacturing PMI came in at 43.3 versus estimates of 43.1; the December EU
manufacturing PMI was 44.4 versus 44.2; the December UK manufacturing PMI was
46.2 versus 46.4.
Other
The
Fed
Monetary policy at year end.
https://scottgrannis.blogspot.com/2023/12/monetary-policy-and-economic-overview.html
Geopolitics
The war is over.
Risks
in 2024
From BofA.
https://www.zerohedge.com/markets/biggest-downside-risks-2024
News on Stocks in Our Portfolios
Johnson &
Johnson (NYSE:JNJ) declares $1.19/share quarterly
dividend, in line with previous.
What
I am reading today
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