6/10/24
The Market
Technical
The S&P had a good week, remaining above all
DMA’s and in uptrends across all time frames. Adding to the good news is that
there is little visible resistance save the upper boundaries of its
intermediate term uptrend (~6800) and long term uptrend (~7100). The bad news is
that the Friday strong payrolls number (see below) caused quite a bit of volatility
across almost every asset class save for equities. I am not sure what to make
of that except to not get too bulled up.
After resetting its 100 DMA to support and nearly
doing the same for its 200 DMA, the long bond took a shellacking on Friday
(huge gap down open). That leaves it in downtrends across all timeframes and
below its 100 and 200 DMAs. In short, its attempted rally was stymied. The only
good news being the gap down open that needs filling. So still lots of work for
TLT to regain an uptrend.
After bouncing off its 50 DMA and attempting to
regain its former very short term uptrend, GLD also had a dismal Friday---again
including a large gap down open. I can understand the selloff in the long
bond---stronger employment = stronger economy = higher for longer. But GLD is different
because a stronger economy also implies higher inflation or certainty no
improvement in inflation, which should be a plus for gold. Hence, my confusion.
Clearly GLD is mightily testing its very short term uptrend, though to be fair
it remains in uptrends across all other timeframes. That said, I marked the
latest low (horizontal red line); if it breaks that, I will sell at least half
of my GDX trading position.
Finally as you might expect, the dollar staged a
gap up open---higher interest rates usually mean a stronger dollar. In the process,
it is again challenging its 50 and 200 DMAs to the upside. Of course, that also
challenges my case for a lower dollar.
Clearly, Friday’s jobs number prompted a sudden change
of heart across the universe of investors. At the moment, I want to wait and see
if this was a one day phenomenon caused by a surprise stat or if that change of
heart is more permanent in nature. This should be an interesting week.
Friday in the charts.
https://www.zerohedge.com/markets/payrolls-malarkey-pussy-meltdown-ends-week-market-mayhem
Fundamental
Headlines
The Economy
Week
in review
Last week’s stats were mixed, although the positive
primary indicators outnumbered the negative three to one. That not exactly reflective
of a ‘muddle through’ scenario, but it clearly suggests that recession is not a
risk.
There was no price data, leaving my ‘inflation is
as good as it is going to get’ forecast largely unchallenged. However, those aforementioned
primary indicators plus Friday’s blowout nonfarm payroll number (1) have inflationary
implications [strong employment = strong economy = upward pressure on
inflation] and (2) gives the Fed plenty of room to keep rates higher for longer.
On the other hand, several major central banks reduced their key interest rates.
All in all, a bit of a perplexing backdrop to the Fed’s upcoming (July) rate
decision though it certainly gives the Fed space to follow a higher for longer
monetary policy (which is not my forecast).
The above notwithstanding, there is room for
confusion in the employment data.
https://www.zerohedge.com/markets/payrolls-instant-reaction-schizophrenic-report
More.
https://www.zerohedge.com/markets/inside-most-ridiculous-jobs-report-years
Bottom line (unchanged, at least for now):
(1)
as long as the government pursues its current
spend, spend policy, I don’t see us making any further progress in lowering the
inflation rate. Indeed, I don’t think that the Fed has any choice but to
continue monetizing the government IOUs.
The case for lower inflation (and commodity
prices).
Commodities
And The Boom-Bust Cycle - RIA (realinvestmentadvice.com)
(2) the economy seems
to be returning to its pre-covid sluggish growth path---the result primarily of
the ‘crowding out’ effects of irresponsible government spending/financing.
The case for a hard landing.
https://www.zerohedge.com/markets/us-economy-finally-cracking
US
International
Other
The Fed
The
Fed is the risk to financial stability.
https://www.zerohedge.com/political/its-fed-thats-risk-financial-stability
Fiscal Policy
And
we need tariffs why?
https://alhambrapartners.com/2024/06/06/weak-global-economy-deglobalization/
The military industrial complex is killing us. While
I don’t agree with some of the author’s assertions, eliminating the neocons in
the defense/intelligence communities and forcing a strict financial
accountability on the military would save US kids lives and the electorate
money.
https://www.zerohedge.com/geopolitical/military-industrial-complex-killing-us-all
Recession
The
ranks of debt ridden companies have soared.
Bottom line
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-cheapest-hedge-pre-election-geopolitical-risk
The next $100 billion company.
https://allstarcharts.com/lets-find-the-next-100b-company/
News on Stocks in Our Portfolios
What I am reading today
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