8/12/24
I
am off to the beach for two weeks. As always, I will have my computer with me. So
if something occurs that requires action, I will be in touch.
The Market
Technical
The S&P made a low on Monday then bounced the
rest of the week. It ended Friday above its 100 DMA for the second day. If it
closes there today, it will reset that DMA to support. However, note that it
can continue to move up to the upper boundary of its short term uptrend, fill
that initial large gap down open and still not break the downtrend off its July
16 high. With valuations high and increasing calls that recession has already
started (see below), caution remains the watchword.
Goldman trading desk tilting negative.
Goldman Assumes Crash Positions: Here Is The
Bank's Top Crash Trade | ZeroHedge
The long bond had a volatile week, but remains in
an uptrend off its April 25 low. We are probably not done with volatility,
especially if the sound level increases from those predicting that a recession
has already started. But the good news for TLT is that would likely mean higher
prices.
GLD had another good week, in the process making a
new higher low. Nonetheless, it remains below its all-time high and has yet to
make a higher high. So the jury is still out a sustained move to the upside. I
retain my GDX position; but I remain nervous.
Like everything else, the dollar had a volatile
week. In its case, it was down, resetting its 50 and 100 DMAs to resistance and
completing what looks like a head and shoulders formation---which is a negative.
If the recession talk persists, I would expect more movement to the downside.
Friday in the charts.
Stocks Erase 'Black Monday' Losses As Vol
Tumbles; Bond Yields & Black Gold Surge | ZeroHedge
Fundamental
Headlines
The Economy
Week
in review
There were very few stats last week and no primary
indicators. What we got was ever so slightly to the positive side (the overseas
data was similarly mixed). Investors in general remained rattled by the
datapoints from the prior two weeks---which as you may recall were terrible (recessionary).
However, as I noted last week, as a general rule, I like to have a trend of at
least four weeks before contemplating a change of forecast; and I can’t make
any kind of judgment regarding the direction of the economy from last week’s numbers.
So, while that two week lousy trend in data hasn’t gone away, it is at least on
hold. Meanwhile, I await this week’s stats and l simply repeat last week’s
synopsis:
This is clearly not indicative of a ‘muddle
through’ scenario. As noted above, this makes two weeks back to back of not
just lousy data, but really lousy data. While two weeks is hardly a trend, the
stats are so bad that they necessitate a serious reconsideration of my ‘muddle
through’ forecast. I have said repeatedly that it increasingly appeared that my
original call of a recession looked like it would turn out to be the correct
one. My general rule before altering my outlook is a solid four week trend. So,
I will be hanging on to the ‘muddle through’ scenario a bit longer. That said,
investors have clearly decided that the risk of a recession has escalated
dramatically.
For the moment, my prognosis remains:
(1) the economy ‘muddles through’ and (2)
inflation has likely seen its lows. But my confidence in that outcome is low.
However, as I have previously noted (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
International
July German PPI was reported at +0.3% versus
forecasts of +0.2%.
Other
Monetary
Policy
I harp constantly on the Fed/Market’s lack of focus
on money supply (versus interest rate setting) in conducting monetary policy. This
is a must read explanation of the reason.
Monetary Policy is Out of Control - First
Trust Advisors - Commentaries - Advisor Perspectives
Wiil
Powell refuse to be bullied by the Markets?
https://www.cnn.com/2024/08/08/business/jerome-powell-wall-street-nightcap/index.html
Rate cut hopes raises risk of funding stress.
Rate-Cut Hopes Raise Risk Of Reigniting Funding
Stress | ZeroHedge
Fiscal
Policy
The
trillion dollar surprise in the Inflation Reduction Act.
https://www.aier.org/article/trillion-dollar-surprise-in-the-inflation-reduction-act/
Recession
This
economist thinks that a recession has already started.
So does this one.
Recession-Risk Reality-Check | ZeroHedge
Still more on the state of consumer finances.
Unemployment
claims as a recession indicator.
Consumer travel trends deteriorating.
"Travel Trends Deteriorating" As Consumer
Downturn Worsens | ZeroHedge
Trucking industry showing signs of recovery.
https://www.zerohedge.com/markets/worst-behind-us-us-trucking-industry-showing-signs-resurrection
Geopolitics
US
takes the war in Ukraine up a notch.
Bottom
line
Buy the dip or embrace the rotation?
https://evergreengavekal.com/buy-the-dip-or-embrace-the-rotation/
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-these-are-key-levels-below-which-market-will-crack
News on Stocks in Our Portfolios
What I am reading today
Monday morning humor.
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