The Morning Call
1/16/24
The
Market
Technical
The S&P rebounded
last week, but still stalled at its recent high and below the upper boundary of
its intermediate term trading range. I said last week: What
counts now is (1) where the index finds support--- We now have a short
term support level (1/4) to shoot against. But it has to survive a test before
it will carry much weight.--- and (2) can it successfully challenge its all-time
high.---which
hasn’t happened, at least not yet. So, the Market needs to do some work before
we get a sense of direction.
Four charts worth
watching.
https://allstarcharts.com/four-charts-worth-watching/
From the head of Goldman’s hedge fund trading
desk.
Low bar for Q4 earnings.
https://www.zerohedge.com/the-market-ear/low-bar-low-deals-crap-continues-crashing
Stocks
fail initial ‘January effect’ test.
S&P
500 Index Fails Initial Test - RIA (realinvestmentadvice.com)
Fear
of a crash up continues.
https://www.zerohedge.com/markets/fear-crash-continues-equities
The long bond continued
its decline, in the process resetting its 200 DMA from support to resistance. All
of the hawkish rhetoric out of the Fed was likely a factor in that performance.
That said, the PPI number on Friday may reverse that. Which leaves me where I
was the prior week: it is way too soon to be making assumptions about a change
in trend.
GLD negated its
very short term uptrend, weakening its advance to its all-time high. I still
think that until it is able to push through that level, I see no reason to be
invested here.
As I noted last
week: 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.
Friday in the
charts.
Fundamental
Headlines
The
Economy
Week in review
The stats in the
US were upbeat last week, with one positive and one neutral primary indicator. Part of that good news was
the inflation data which continued to point lower. As you know, I think that
risk is behind us, at least in the short run. One the other hand, the irregular
nature of the economic growth numbers still don’t provide any clear indication
as to whether the coming landing is soft, hard or we have no landing at all. To
be clear, there is a growing consensus for the soft landing scenario---I just
don’t see it at this time.
Bottom line:
(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
The January NY Fed manufacturing index came
in at -43.7 versus estimates of -5.
International
The November EU trade
balance was E30.3 billion versus forecasts of E11.2 billion; November
industrial production was -0.3%, in line.
The November UK
unemployment rate was 4.3%, in line, November average earnings were up 6.5%
versus +6.8%.
December Japanese
YoY machine tool orders fell 9.9% versus projections of -9.0%; December PPI was
+0.3% versus 0.0%.
December German
CPI was up 02%, in line; December German
PPI was -0.6% versus -0.3%; 2023 GDP growth was -0.3%, in line; the January
economic sentiment index was 15.2 versus 12.0; the January current conditions
index was -77.3 versus -77.0.
The January EU
economic sentiment index as 22.7 versus consensus of 21.9.
Other
The
Fed
Fed whisperer
confirms the wind down of QT.
Goldman thinks that
it is time for central banks to start easing.
Money printing will
accelerate as debt soars.
https://www.zerohedge.com/markets/massive-money-printing-will-accelerate-debt-soars
Fiscal
Policy
Our ruling class’s latest scam to disguise
spending as tax cuts.
The stealth stimulus is real and growing
fast.
https://climateerinvest.blogspot.com/2024/01/remember-stealth-stimulus-its-real-and.html
The fine art of can kicking.
Recession
The case for a ‘soft’ landing.
https://stayathomemacro.substack.com/p/lights-on-the-runway-for-the-softACAC
Recession alert weekly leading economic
index.
Too soon to be optimistic about 2024.
The latest Q4 nowcast.
https://www.calculatedriskblog.com/2024/01/q4-gdp-tracking-13-to-22-range.html
The latest from Ed Yardini.
DEEP
DIVE: The True Story About Long & Variable Lags In Monetary Policy
(yardeniquicktakes.com)
China
And you think we have problems.
Bottom line
The latest from
BofA.
News on Stocks in Our Portfolios
What
I am reading today
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