10/21/24
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, (it better hurry
because October is almost over) 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.
Why Markets get stronger.
Why Strong Markets Get Stronger
(downtownjoshbrown.com)
Anatomy of a meltup.
Anatomy of a Meltup (yardeniquicktakes.com)
The long bond continued its losing ways. It attempted
to reset its 100 DMA to support---unsuccessfully. Further, it is commencing a
second challenge of its 200 DMA (now support) in as many weeks. If it
successfully resets that 200 DMA to resistance, there is lots more potential downside.
GLD maintained its upward bias. I noted over the last
two weeks that I found it surprising that ‘the price action could remain
this calm (positive) 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:
Despite a minor selloff on Friday, the dollar
continues to shoot the moon---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/bullion-bitcoin-banks-soar-trump-trade-dominates-data-week
Fundamental
Headlines
The Economy
Week
of review
The economic stats last week were slightly positive
though the primary indicators were negative (one plus, two minus) ---so the
week was basically a wash. That pretty much fits my ‘muddle through’ scenario.
I would probably stop worrying about a downside
risk (recession) to my ‘muddle through’ outlook if I weren’t so cynical to
think that the stats we are getting are shaded to the upside for political purposes.
There was no US inflation numbers but overseas
(which in total was upbeat) the price data was good. I will count that as a
modest positive though they are clearly at odds with my forecast---but I am not
changing anything based on one week’s stats.
…. 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
September German PPI was -0.5% versus
estimates of -0.2%.
Other
Bastiat and the ‘broken window’ effect.
Bastiat And The "Broken Window" - RIA
(realinvestmentadvice.com)
Fiscal Policy
How
affordable did the Affordable Care Act make healthcare?
https://politicalcalculations.blogspot.com/2024/10/visualizing-forty-years-of-health.html
Recession
Landing cancelled?
Counterpoint.
Big four
recession indicators.
https://www.advisorperspectives.com/dshort/updates/2024/10/17/the-big-four-recession-indicators
The
latest nowcast.
https://www.capitalspectator.com/us-q3-economic-gdp-growth-nowcast-strengthens/
Bottom line.
Q3 earnings estimates remain optimistic.
Q3 Earnings Estimates Remain Optimistic - RIA
(realinvestmentadvice.com)
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-gold-heading-well-above-3000
A small, cap stock revival?
https://www.capitalspectator.com/are-reports-of-small-cap-stocks-revival-prospects-premature/
News on Stocks in Our Portfolios
What I am reading today
Interview with Kevin Hassert, former chair
of Trump’s Council of Economic Advisors.
https://www.ft.com/content/b1de7422-848d-46a9-842f-3117a115bddf
The progressive’s
threat to constitutionalism.
https://lawliberty.org/the-progressive-threat-to-constitutionalism/
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