8/26/24
The Market
Technical
The S&P continued its recovery in fairly
dramatic fashion, spurred on by the dovish narrative of the FOMC minutes and
Powell’s even more dovish comments at Jackson Hole. While it is still short of
making a higher high and has that gap up open down below, I think that the
burden of proof is on the bears to argue that the correction isn’t over. That
said, (1) the pin action is suggesting that investors are more focused on an
easing Fed than a ‘Goldilocks’ economy assumption---and remember the adage ‘sell
the first rate cut’, (2) whatever you may think of the social impact of the new
democratic party platform, economically it is inflationary; and I think that a negative,
given the current poll numbers and (3) valuations in total remain high. I
remain cautious.
Fading the rally.
https://www.zerohedge.com/markets/fading-rally-hedge-funds-sell-stocks-fastest-pace-march-2022
The long bond had a volatile week. While it couldn’t
make a new higher high, it continues to make new higher lows. So given that and
the latest dovish narrative from the Fed, it seems highly probable that the
trend remains to the upside.
GLD confirmed its breakout above its former all-time
high. I retain my GDX position and will likely add to it. But not yet.
The dollar continued to fall in value. As I noted
last week, if it reaches the level suggested by that head and shoulders
formation, it would retreat to the December 28 low.
Friday in the charts.
Fundamental
Headlines
The Economy
Week
of review
Another (very) slow week for data. Overall, it was
slightly positive with one neutral primary indicator. Overseas, the stats were
bigly upbeat. So, for the third week in a row, the numbers aren’t really
telling us anything about the economy---good or bad. Which leaves my ‘muddle
through’ forecast is a state of suspended animation.
That said there was plenty of
other
economic related news: dovish FOMC minutes, negative data revisions and Powell’s
capitulation at Jackson Hole.
https://www.zerohedge.com/markets/its-jackson-hole-day-heres-what-watch
That it now appears that we are getting a rate cut
in September raises the odds that my current forecast will win out. Not assure
but at least ease the restrictive monetary pressure on the economy. Now the
question is, did the Fed wait too long?
My prognosis remains:
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.
US
July durable goods orders rose 9.9% versus
expectations of +5.0%; ex transportation, they were down 0.2%versus -0.1%.
International
The August German business climate index was 86.6
versus consensus of 86.0; the August current conditions index was 86.5, in
line.
Other
Fiscal
Policy
Dems get jiggy over price gouging.
Recession
Is
housing poised for a rebound?
https://www.capitalspectator.com/is-the-housing-market-poised-for-a-rebound/
Mortgage rate relief is coming.
https://scottgrannis.blogspot.com/2024/08/mortgage-rate-relief-is-coming.html
Red flags in the latest retail sales report.
Red Flags In The Latest Retail Sales Report - RIA
(realinvestmentadvice.com)
Bottom
line
The latest must read analysis from BofA,
https://www.zerohedge.com/markets/hartnett-gold-just-surpassed-euro-worlds-2nd-largest-reserve-asset
Be patient.
https://www.nytimes.com/2024/08/23/business/stock-market-election-season.html
News on Stocks in Our Portfolios
What I am reading today
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