9/9/24
The Market
Technical
The S&P had a bad week capped by a terrible
Friday. It pushed through its 50 DMA to the downside (if it remains there
through the close of Monday, it will revert to resistance) and then dropped
like a stone to near its 100 DMA (~5380). I can only surmise that the stock
jockeys have again decided the bond crowd is right, i.e., the accepted scenario
in stock land is drifting from a ‘soft landing’ to a ‘softer landing.’ Can a recession forecast be far behind? (my
original but later altered forecast). I hate flip flopping, but I may have to.
The Friday move (1) closed that gap up open [that’s
actually a plus], (2) leaves it within striking distance of its 100 DMA
[~5380], (3) with the 23.5% Fibonacci retracement level [~5157 and the former very
short term bottom] and the 200 DMA [~5106] lurking below. I remain cautious.
The importance of sentiment.
https://klementoninvesting.substack.com/p/in-the-end-it-all-boils-down-to-sentiment
The techincals are not looking good.
https://www.zerohedge.com/the-market-ear/fearful-friday
While TLT was off slightly on Friday, it had a good
week nonetheless making a new higher high. It also (1) is above all three DMAs
and (2) it remains in a very short term uptrend. As long as an approaching ‘softer
landing’?/recession scenario gains acceptance, I expect the upward price action
to hold. That said, the current upside blast seems to be getting a little long
in the tooth, technically speaking. So, some backing and filling would make sense.
Bonds up (rates down), the dollar flat---gold by
all rights should be up at least a little. But it continues to be unable to get
that job done. That keeps me nervous about GLD and glad that I sold my GDX.
The dollar continued in a very short term downtrend,
making a new lower high in the process. At the moment, there is no reason to
assume that downtrend won’t continue. And as I noted previously, if it reaches the
level suggested by that head and shoulders formation, it would retreat to the
December 28 low.
Friday in the charts.
https://www.zerohedge.com/markets/kamala-karnage-market-goes-haywire
Fundamental
Headlines
The Economy
Week
of review
Last week’s economic stats were evenly balanced,
including the primary indicators (two plus, two minus). (Overseas data was overwhelmingly
negative.)
And,
The US numbers clearly support my ‘muddle through’
scenario (which the Street is more affectionately referring to as a ‘soft
landing’).
However, the aforementioned international stats as
well as the disappointing narrative in the latest Beige Book keep me vigilant
to potential problems. On the other hand, they help the Fed rationalize a
declining Fed Funds rate which we will almost certainly see manifest at the
September FOMC meeting.
The hope, of course, is that a rate cut will help
insure the ‘soft landing.’ However, I
think (and certainly the bond Market is suggesting) that there remains the risk
that the Fed is too late in lowering rates and a recession is the likely result.
There was not much in the way of price data though
the Beige Book hinted at mild inflationary pressures. Still, I will likely soon
revise my original inflation forecast: ‘inflation is as good as it is going to
get’---at least in the short term.
That said unless and until somebody in
Washington realizes the inflationary implications of the current horrendously irresponsible
fiscal policy, I believe that either the Fed will have to finance that
policy---meaning that higher inflation is an inevitability---or it
won’t---meaning the federal government will suck capital out of the private
sector, stagnating economic growth.
A must read interview with Ken Rogoff.
https://themarket.ch/english/we-will-see-more-spikes-in-inflation-ld.11975
My forecast remains:
(1) the economy
‘muddles through’ and (2) inflation has likely seen its lows. But my confidence
in the latter outcome is low and sinking.
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
International
Other
Monetary
Policy
Update
on the Fed’s balance sheet.
Fiscal
Policy
Social
Security faces $63 trillion in unfunded liabilities.
https://www.zerohedge.com/political/social-security-facing-63-trillion-unfunded-liabilities
Civil
Strife
A
cure.
Geopolitics
I am not
sure this author has the solution correct, but he nailed the problem.
https://www.nakedcapitalism.com/2024/09/who-wants-to-kill-and-die-for-the-american-empire.html
Bottom line
This is the first analyst that I have found willing
to state long term bearish Market view.
https://www.ft.com/content/c074dde0-7510-44c0-a178-8ca80254dfb1
Except for the ever reliable BofA.
https://www.zerohedge.com/markets/hartnett-economy-has-never-been-more-polarized
News on Stocks in Our Portfolios
AbbVie (NYSE:ABBV) declared $1.55/share
quarterly dividend, in line with previous.
What I am reading today
Monday morning humor.
https://politicalcalculations.blogspot.com/2024/09/inventions-in-everything-urinal-headrest.html
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