12/2/24
The Market
Technical
The S&P maintained its upward momentum. While
it has not filled the huge gap up open of 11/6 (a negative), it still has a
number of pluses going for it: (1) seasonally, it a positive time of the year,
(2) with Trump’s appointments, the long term economic outlook is improving [deregulation
and lower spending], (3) there has been few post-election disturbances.
So, my conclusion remains ‘the downside risk to
stock prices has been truncated.’
That said, it is early to be getting too jiggy with
a possible improving economic outlook. So, patience is still in order---unless
any purchases are strictly for a trade.
The next pain trade?
https://www.zerohedge.com/the-market-ear/upside-force-5
The long bond did a moon shot last week, blowing
through the upper boundary of a recently reset very short term downtrend, resetting
again to a trading range. I noted in last week’s Monday Morning Chartology that
‘there are multiple gap down opens overhead that offer magnetic pull to
the upside.’ Now there are multiple gap opens in both directions, confusing the
issue in the short term. However, from the long term point of view, the trend remains
solidly to the downside.
https://mrzepczynski.blogspot.com/2024/11/the-big-rate-breakout-in-historic.html
GLD made another U turn last week, selling off spectacularly
on Monday, making a new lower high and again resetting its 50 DMA (this time
back to resistance)---which keeps the ‘gold up, interest rates up, dollar up’
scenario in a state of confusion. If gold makes another lower high, it will
have built a head and shoulders top. That suggests caution.
The dollar staged its first serious selloff since
its 9/30 low, making two gap down opens, threatening to end its rapid climb
since that 9/30 low and failing to successfully challenge the upper boundary of
its short term trading range. Of course, give the steepness of its recent rise,
some digestion process is to be expected. Let’s see where it finds support before
making judgement about trend.
Friday in the charts.
https://www.zerohedge.com/market-recaps/stocks-bonds-bitcoin-rally-rate-cut-odds-rise-worst-macro-week-5-months
Fundamental
Headlines
The Economy
Week
of review
Last week’s US economic stats were upbeat as were the
primary indicators (five plus, three neutral, two minus). While this data suggests
an outlook more positive than my ‘muddle through’ scenario, it is not part of a
larger trend of a consistently growing economy. Of course, it could be the start
of such; but only time will tell us that. So for the moment, I will stick with
my forecast.
Overseas, the numbers were terrible which is
starting to look like a trend. And ultimately that is not good for the US.
The Fed also released the minutes from its most
recent FOMC meeting. There was a lot of the ‘on the one hand; on the other hand’
in the narrative; but the bottom line was the odds of a December rate cut went
up, a January rate cut unchanged (zero) and a March rate cut down (more uncertainty).
I get all that---with the flurry of headlines coming out of the Trump camp, it
is small wonder that the governors are reticent to do anything until there is a
clearer picture of exactly what The Donald is going to do.
Speaking of which, Trump was pounding the table of
tariffs last week. While I still think rhetoric is just part of a negotiating strategy,
I just don’t know how much. And as you know, I find his announced tariff
policies the least appealing of his economic program.
Bottom line: my forecast remains: (1) the economy
‘muddles through’ and (2) inflation has likely seen its lows. But the level of
economic uncertainty is higher than normal, at least in the short term, and all
economic forecasts (including my own) should be viewed accordingly.
https://scottgrannis.blogspot.com/2024/11/charts-that-call-my-attention.html
US
International
The November EU manufacturing PMI was 45.2, in line;
the November German manufacturing PMI was 43.0 versus 43.2; the November UK
manufacturing PMI was 48.0 versus 48.6.
Other
Big four recession indicators.
https://www.advisorperspectives.com/dshort/updates/2024/11/27/the-big-four-recession-indicators-real-personal-income-up-0-6-in-october
The latest nowcast.
https://www.capitalspectator.com/revised-us-gdp-nowcast-for-q4-still-reflects-modest-slowdown/
Fiscal Policy
If
congress would just do its job.
https://www.creators.com/read/veronique-de-rugy/11/24/a-season-of-self-reflection-is-here-will-congress-take-part
Inflation
Still
under control?
https://bonddad.blogspot.com/
I don’t
think so.
https://wolfstreet.com/2024/11/27/inflation-re-accelerates-despite-plunging-gasoline-prices-as-core-services-pce-price-index-hits-7-month-high/
The
low is probably in.
https://www.zerohedge.com/markets/cycle-low-global-inflation-most-likely
Tariffs
The
US is not an economic island.
https://www.aei.org/economics/america-is-not-an-economic-island/
Civil Strife
I may have rejoiced too soon regarding the
potential blowback from Trump’s election.
https://www.zerohedge.com/political/trump-nominees-targeted-bomb-threats-radical-groups-plan-massive-protests-inauguration
Investing
Anticipating the outperformance of small cap
stocks.
https://investorplace.com/hypergrowthinvesting/2024/11/small-caps-unexpected-outperformance-could-drive-gains-in-a-hurry/
Too late to buy bitcoin?
https://awealthofcommonsense.com/2024/11/is-it-too-late-to-buy-bitcoin/
Pollyanna stockholders may get a rude
awakening.
Pollyanna Stockholders May Soon Get Rude Inflation
Awakening | ZeroHedge
Speculation is getting extreme.
Extreme Speculation Has Returned - RIA
The latest from BofA.
https://www.zerohedge.com/markets/michael-hartnetts-trades-2025-go-big-25-and-how
News on Stocks in Our Portfolios
What I am reading today
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