9/23/24
The Market
Technical
Clearly, the Fed rate cut made the stock boys’ day.
The S&P had an excellent week, pushing through its all-time high. If it remains
there through the close on Tuesday, I assume that we will be on another leg up.
However, there are so many potentially game changing news events in the near
future, that I remain cautious. But for the moment that is clearly wrong.
The Market narrative is almost
always wrong.
https://www.apolloacademy.com/the-market-narrative-is-almost-always-wrong/
For whatever reason, the bond guys weren’t nearly as
impressed with the rate cut as their equity counterparts. Of course, it could
be that the cut was already fully discounted. As I noted last week, the prior
move up was getting a little long in the tooth, so some backing and filling
would make sense. Nonetheless, TLT is still in good technical shape: it remains
(1) above all three DMAs and (2) in a very short term uptrend.
GLD investors were clearly happy with the rate cut.
So for the moment, the momentum remains the upside. Clearly, I sold my GDX too
soon.
The dollar was actually up for the week. Something
that I would not have expected. Like bonds, the rate cut was apparently already
in the price of eggs. However, it doesn’t alter the techincals which point to the
December 28 low as the likely fulfillment level of that head and shoulders
formation.
https://www.zerohedge.com/the-market-ear/bullish-case-usd
Friday in the charts.
https://www.zerohedge.com/markets/gold-oil-crypto-soar-fed-slashes-rates-stocks-record-highs
Fundamental
Headlines
The Economy
Week
of review
We were light on economic stats last week. What we
got was positive with the primary indicators balanced (one plus, one neutral,
one minus). (Overseas data was again overwhelmingly negative.) Of course, the big news of the week was the 50
bp rate cut from the Fed---which the numbers of late seem to be supporting. Though
in my opinion, there has been enough ambiguity (namely inflation numbers) in
the stats that 25 bp would have been good enough.
To me the biggest reason for the 50 bp cut (even
though Powell didn’t refer to it) is the continuing weakness across the board
in the international data---how can a slowing global economy not negatively
impact the US. On the other hand, I think Powell is overly optimistic about the
Fed’s progress on inflation.
All to be determined.
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.
My forecast remains: (1) the economy ‘muddles
through’ and (2) inflation has likely seen its lows.
US
The August Chicago national activity index was .12
versus forecasts of -.2.
International
The September EU flash manufacturing PMI was 44.8
versus projections of 45.6; the flash services PMI was 50.5 versus 52.1; the
flash composite PMI was 48.9 versus 50.6; the September German flash manufacturing
PMI was 40.3 versus 42.3; the flash services PMI was 50.6 versus 51.0; the
flash composite PMI was 47.2 versus 48.2; the September UK flash manufacturing
PMI was 51.8 versus 52.5; the flash services PMI was 52.8 versus 53.5; the
flash composite PMI was 52.9 versus 53.5.
https://www.zerohedge.com/economics/european-pmis-plunge-after-olympics-hangover-hammers-france
Other
Hotel occupancy declines YoY.
https://www.capitalspectator.com/gdp-nowcasts-still-indicate-low-recession-risk-for-us-in-q3/
Monetary Policy
Bank
of Japan leaves rates unchanged.
https://www.ft.com/content/aa17d8d8-4dca-4443-adc4-37ae975ffaa8
Recession
Q3
nowcast rises again.
https://www.capitalspectator.com/gdp-nowcasts-still-indicate-low-recession-risk-for-us-in-q3/
Bottom line
Market declines and the problem with time.
Market Declines And The Problem Of Time - RIA
(realinvestmentadvice.com)
News on Stocks in Our Portfolios
What I am reading today
Ten
lessons of the economic way of thinking.
https://www.aier.org/article/ten-lessons-of-the-economic-way-of-thinking/
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