10/14/24
The Market
Technical
The S&P just keeps on rollin’ along. It is in
uptrends across all timeframes and above all DMA’s. While some technicians are
warning of an October decline, my assumption is that stocks will sustain their
upward momentum at least through year end. That said, the US political
environment remains unstable, in my opinion; and that keeps me cautious, which for
the moment is clearly wrong.
Stocks behavior during election years.
https://www.lpl.com/research/blog/stock-markets-what-to-expect-when-were-electing.html
How S&P sectors perform during a soft landing.
https://www.apolloacademy.com/sp-500-sector-returns-during-soft-landings/
US money market funds at record highs.
https://www.bloomberg.com/news/articles/2024-10-10/a-record-6-47-trillion-is-piling-up-in-us-money-market-funds?srnd=homepage-americas
Hedge funds capitulate.
https://www.zerohedge.com/markets/blow-top-after-8-weeks-selling-hedge-funds-capitulate-and-buy-stocks-fastest-pace-2021
The long bond continued its losing ways---resetting
its very short term uptrend to a trading range and its 100 DMA from support to
resistance while commencing a challenge of its 200 DMA (if it remains there
through the close on Tuesday, it will revert to resistance). I said last week
that I thought that there was a decent chance that TLT could find support and halt
its decline. Well, that ain’t happening. If it successfully resets that 200 DMA
to resistance, there is lots more potential downside.
https://www.capitalspectator.com/10-year-us-treasury-yield-fair-value-estimate-11-october-2024/
GLD resumed its upward bias. I said last week that I
found it surprising that ‘the price action could remain this calm
during a week in which TLT plummeted in price and the dollar soared. Indeed,
barring some catastrophic economic/political/ military event, I don’t see how
it can maintain its upward bias as long as both interest rates and the dollar
are in Titan III formations.’ That
hasn’t changed.
My thoughts on the dollar are unchanged:
As you can see, the dollar had not one, not
two, not three but four gap up opens in succession last week---not suggesting
but shouting that investors think that either something enormously positive is
occurring or about to occur in the US or that something enormously negative is
occurring or about to occur internationally. We can all speculate on what those
may be but if they don’t happen it seems likely that some retracement is to be
expected.
Friday in the charts.
https://www.zerohedge.com/market-recaps/bitcoin-bullion-biggest-shorts-blast-higher-end-bad-data-week
Fundamental
Headlines
The Economy
Week
of review
The economic stats last week were negative as were
the primary indicators (one neutral, on minus). The trend in the US numbers
continue to fit my ‘muddle through’ scenario---as do the inflation stats (PPI
was the aforementioned minus).
https://wolfstreet.com/2024/10/11/after-large-upward-revisions-core-core-services-ppi-inflation-not-benign-at-all-whole-scenario-changed-for-the-worse/
I continue to worry that the risk to my ‘muddle
through’ outlook is to the downside (i.e., weaker economy). At the moment, my
inflation forecast appears right on.
Counterpoint from my favorite optimist.
https://scottgrannis.blogspot.com/2024/10/a-close-look-at-inflation-and-interest.html
But here is some support for my side.
https://politicalcalculations.blogspot.com/2024/10/why-has-eating-out-become-so-costly.html
…. 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
International
The September Chinese trade balance was $81.7
billion versus consensus of $89.8 billion.
Other
Ed
Yardini previews this week in the economy.
The Economic Week Ahead: October 14-18
(yardeniquicktakes.com)
The latest Q3 nowcasts.
https://www.calculatedriskblog.com/2024/10/q3-gdp-tracking-around-3_11.html
Tariffs
Lessons
from a protectionist past.
https://www.city-journal.org/article/lessons-from-protectionism-past
Dumb
tariffs.
https://edgyoptimist.substack.com/p/dumb-tariffs?utm_source=post-email-title&publication_id=2450694&post_id=150016418&utm_campaign=email-post-title&isFreemail=true&r=67wdy&triedRedirect=true&utm_medium=email
Bottom line
Latest from BofA.
https://www.zerohedge.com/markets/hartnett-bull-market-began-666-ending-blowoff-top-6666-just-feels-so-right
News on Stocks in Our Portfolios
What I am reading today
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