The Morning Call
3/4//24
I am off the beach for a week.
Back 3/12.
The
Market
Technical
The S&P
continued its positive performance. It remains above the upper boundary of that
wedge formation and has no visible resistance except at truly extended levels (~6700).
On the one hand, it has that large gap up open below that should exert a gravitational
pull on the index’s upward momentum. Plus, almost all the Street strategists
seem to agree that valuations are getting extended. On the other hand, none of
them are making a ‘Sell’ call. And the Market internals remain healthy.
Bottom line. Momentum
remains to the upside, at least short term. I continue to hold the IWN trading position.
But as I pointed out last week, several of our holdings are nearing their Sell
Half price range.
Beware
the ides of March.
https://www.zerohedge.com/markets/ides-march
The long bond was up
again on the week. However, it remains in downtrends across all time frames and
below both its 50 and 200 DMAs. Until it can establish a higher high on a very
short term basis, the assumption has to be that the trend is down.
GLD rallied hard
on the week and appears to have its all-time high in its sights again. If it
continues to advance that will be its fourth challenge of that high in as many
months---the first three clearly being unsuccessful. Will number four be the
lucky charm? In don’t know. But I do know that (1) it has two big gap up opens
below that need to be filled and (2) I think it pointless to consider a position
in gold until it can break above its all-time high.
While
the dollar’s long term uptrend remains in place, its 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. And that is what has been happening since
its low in late December. However, two weeks ago week, the dollar’s advance
showed some signs of tiring. As it approached the upper boundary of its short term
downtrend and both its 100 and 200 DMA’s (heavy resistance), it failed to hold
the minor uptrend off its December low. Last week, it was basically traded unchanged---so
no directional follow through.
Friday in the
charts.
https://www.zerohedge.com/markets/everything-rallies-first-day-march-after-fed-hints-next-qe
Fundamental
Headlines
The
Economy
Week in review
It was a big week
for economic data. The stats in the US were overwhelmingly negative while the
primary indicators were tilted to the minus side (one positive, three mixed,
two negative). I think that this puts an end to any thoughts that the economy
was headed for a soft landing which was created by the recent brief string on
upbeat readings. I am not saying that the latest numbers prove that we are
recession bound; but we are definitely not out of the woods. In short, no
reason to back off my recession call.
In addition, there
were indications that the trend towards lower inflation was encountering some
problems---supporting the more hawkish tone coming out of the Fed recently. However,
Friday afternoon a regional Fed head made some dovish noises (which the Markets
loved), suggesting that Fed may be getting more confident of its victory over
inflation (see below). So color me confused.
Bottom line:
(1)
last week’s data [and Fed speak] certainly muddied
the overall economic outlook,
(2)
unfortunately, the inflation risk may not be behind
us as per my current forecast. I am not altering it yet. And last week’s
numbers coupled with some confusing Fed speak leave me befuddled. However, if
indeed the Fed is considering an easier monetary policy that would only amplify
the impact of a grossly irresponsible fiscal policy which if left unresolved
will ultimately push interest rates and inflation to even higher levels,
risking a tighter monetary policy and impeding the economy’s ability to grow.
(3) just as
unfortunate, the question of recession [what kind of landing] which appeared to
be gaining clarity, turned a bit murkier with last week’s data. As you know, my
forecast had been for some type of growth problem which I was considering
changing. Now, not so much.
US
International
Other
The
Fed
Ten reasons why the Fed won’t cut rates in
2024.
https://www.zerohedge.com/markets/apollo-10-reasons-why-fed-wont-cut-rates-2024
Fed’s Waller hints a QE reverse twist.
(similar to the funky chicken)
https://www.zerohedge.com/markets/gold-bonds-soar-feds-waller-hints-qe-reverse-twist
Inflation
The problem with a 2% inflation target.
https://www.econlib.org/the-problem-with-doves/
The latest nowcasts.
https://www.calculatedriskblog.com/2024/03/gdp-tracking-low-2-range.html
Bottom line
Strategists are
scrambling to keep up with the Market.
Living in an
Nvidia stock market.
February equity
performance review.
Crypto skeptic.
https://www.ft.com/content/4de4c6b7-6335-4953-a81b-927499ba0bbb
News on Stocks in Our Portfolios
What
I am reading today
The
rise of the financial dopamine culture.
https://portfoliocharts.com/2024/02/27/the-rise-of-financial-dopamine-culture/
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