7/15/24
The Market
Technical
The S&P maintained its upward momentum last
week. (1) It remains above all DMA’s and in uptrends across all time frames, (2)
there is little visible resistance save the upper boundaries of its
intermediate term uptrend (~6800) and long term uptrend (~7100), (3) on,
Thursday breadth started to broaden out and (4) the universe is getting jiggy
about an easier Fed [lower rates]. All pluses. The negatives are (1) we are
entering a seasonally difficult period and (2) that four weeks old gap up open
still needs to be filled---although even if that occurs, there will be almost no
technical damage done to this chart. I remain nervous and wrong.
Two important takeaways from Thursday’s dramatic
pin action.
https://traderfeed.blogspot.com/2024/07/two-important-takeaways-from-recent.html
More on Thursday’s schizophrenic behavior.
https://sherwood.news/markets/us-market-volatility-index-performance-individual-stock-divergence/
From Goldman’s hedge fund chief.
https://www.zerohedge.com/markets/goldman-hedge-fund-honcho-makes-case-surgical-risk-reduction
Nobody wants put options.
Put Options - Nobody Wants Them - RIA
(realinvestmentadvice.com)
The long bond tip toed though the tulips last week
on the back of the aforementioned promise of an easing in monetary policy. TLT
is now above all three DMAs. On the other hand, it remains within downtrends
across all timeframes (although, it can rally a great deal before it challenges
any of those downtrends) and has three gap up opens in the last two weeks that
need to be closed. However, as long as the bond guys believe that rates are
going down, the direction will remain up.
GLD had another good week. Still it needs to
successfully challenge its former high to reset to a solid uptrend and that gap
up open on Thursday will likely act as restraint. I retain my GDX position.
The dollar acted pretty much as you would expect (down)
on the easier Fed/lower interest rates news. In the process, it voided its very
short term uptrend, reset its 50 DMA to resistance, pushed out of the developing
pennant formation and is about to challenge its 200 DMA (now support). All that
suggests more downside.
Friday in the charts.
Fundamental
Headlines
The Economy
Week
in review
Not a lot of data last week. What we got was mostly
positive, though the primary indicators were mixed. Those happened to be CPI (which
was lower than expected) and PPI (which was higher than predicted). On balance,
I think that is a slight negative since PPI anticipates CPI, suggesting that
future CPI reports will be adverse.
On the other hand, Powell’s Humphrey Hawkins
testimony was somewhat dovish.
https://scottgrannis.blogspot.com/2024/07/the-door-is-wide-open-to-multiple-fed.html
All in all, that leaves us with a less than clear
view of inflation’s future. I know that the Market is jiggy in anticipation of a
lower rate of inflation and, hence, an easier monetary policy. But I am holding
to my forecast that inflation is at or near its nadir.
Counterpoint.
As to the economy itself, the stats (even though
there was not many of them) supported my ‘muddle through’ scenario. So, I am
sticking with it even though the very short term trend in the numbers is
pointing to something closer to recession.
For the moment, my forecast remains:
(1) the economy muddles through and (2)
inflation has likely seen its lows. But clearly my confidence in that outcome
is weakened.
While not quite enough to warrant altering my
forecast, another couple of weeks of discouraging numbers will. In short, (1)
my original recession call may turn out to be correct and (2) while I continue
to believe that profligate fiscal policy and an accommodative Fed will
ultimately lead to higher inflation, a recession could work against that
scenario in the near term.
And I would add that if (1) recession is the
ultimate scenario and (2) the Fed maintains its tight money policy, then
conditions could develop even worse.
US
The July NY Fed manufacturing index was -6.6 versus
expectations of -6.0.
International
May EU industrial production declined 0.6% versus
consensus of -1.0%.
Q2 Chinese GDP grew 0.7% versus predictions of
1.1%; June YoY industrial production was up 5.3% versus +5.0%; June YoY retail
sales were up 2.0% versus +3.3%; June YoY fixed asset investments were up 3.9%,
in line.
Other
Monetary Policy
What
rate cuts can and cannot do.
https://www.zerohedge.com/economics/what-rate-cuts-can-and-cannot-do
Fiscal
Policy
The author’s point is well taken but blaming the
dems for the circumstances is way off base. The GOP party as well as both Bush
and Trump spent money like drunken sailors.
https://www.foxnews.com/opinion/national-security-crisis-our-pocketbooks
Recession
The
latest nowcasts.
https://www.calculatedriskblog.com/2024/07/q2-gdp-tracking-around-2.html
Civil Strife
Institutional
failure reminiscent of Kennedy failure. Some sorry he missed.
Malice or massive incompetence.
Bottom line
Latest from BofA (must read).
https://www.zerohedge.com/markets/hartnett-signal-start-selling-tech-giants
Growth by asset class.
https://politicalcalculations.blogspot.com/2024/07/the-value-of-100-invested.html
The ‘broken clock’ fallacy.
https://www.zerohedge.com/markets/broken-clock-fallacy-art-contrarianism
News on Stocks in Our Portfolios
BlackRock press release (NYSE:BLK): Q2 Non-GAAP EPS
of $10.36 beats by $0.40.
Revenue of $4.81B (+7.8% Y/Y) beats by $30M.
What I am reading today
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