8/11/25
The Market
Technical
The S&P had great week following previous
Friday’s big selloff. It hasn’t recovered to its former high, but it is awfully
close. The near term key will be whether or not it can re-establish the uptrend
off its April lows. Favoring it is that the index remains (1) above all
three DMAs and (2) in uptrends across all timeframes. Time to wait and see.
The latest sentiment numbers.
https://www.bespokepremium.com/interactive/posts/think-big-blog/bull-bear-spread-tips-negative
Good news and bad news.
https://www.carsongroup.com/insights/blog/some-bad-news-and-some-good-news-2/
Panic season.
https://www.acadian-asset.com/investment-insights/owenomics/panic-season
The latest from Goldman’s trading desk.
https://www.zerohedge.com/markets/heres-what-goldmans-top-traders-have-been-watching-week
Hedge funds short stocks at the fastest pace in
four months.
https://www.zerohedge.com/markets/hedge-fund-short-stocks-fastest-pace-4-months-retail-bid-fades
More on hedge fund positioning.
https://www.zerohedge.com/the-market-ear/flow-know
TLT successfully completed the challenge of its 100
DMA (resetting it to support) early in the week then reversed itself and is challenging
it again to the downside. Since it remains below its 200 DMA and in downtrends
across all timeframes, if it does reset its 100 DMA, then we are back to the assumption
that the longer term trend remains down.
GLD had a good week, resetting its 50 DMA to
support. That puts it back above all DMAs and in uptrends across all timeframes.
With the level of uncertainty/confusion/disagreement (see below) at lofty
levels, gold seems likely to continue to advance.
The
dollar sold off last week, leaving its 100 DMA as resistance. While it not an encouraging
chart, it does have three near in support levels (the 50 DMA, the lower
boundary of a very, very short term uptrend and the lower boundary of its short
term trading range) that could help it construct a double bottom. Nevertheless,
if an interest rate cut is (being anticipated) coming and inflation increasing,
I am hard pressed to think that the worst is over.
Friday in the charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
Fundamental
Headlines
The
Economy
The stats last week were upbeat as were the primary
indicator (two up, one down); although the down primary indicator was a price
measure. Overseas, the data was negative including one inflation reading.
So, the numbers were basically supportive of (1) my
‘muddle through’ scenario as well as (2) my ‘inflation is as good as it is
going to get’ forecast.
On the policy front: Trump (1) nominated a dove to fill the vacant FOMC
seat [clearly not a surprise] and (2) continued to make progress on the
trade/tariff front.
The thing that stands out to me about last week was
the complete lack of consensus among the experts on what those employment figures
from the prior week and Trump’s tariff policy mean with respect to the strength
of the economy and the direction of inflation. Hopefully, I conveyed that
through the links I provided. But the net of this is that it makes me all the
more uncertain about the odds of recession, inflation and the likelihood of my
forecast being correct.
For the moment I am sticking with my bottom line. Short
term, I remain in the ‘muddle through’ camp. Longer term, current fiscal policy
continues to be a major negative, leaving the overall bottom line (i.e., larger
deficits, more national debt) unchanged. Which means slower growth and higher
inflation. But put an asterisk by it.
Goldman fears economy near stall speed.
https://www.zerohedge.com/markets/inflection-point-goldman-fears-us-growth-near-stall-speed
US
The economic week ahead.
ECONOMIC WEEK AHEAD: August 11 - 15
International
July Chinese YoY vehicle sales were up 14.7% versus
consensus of +15.0%.
Other
The housing problem.
https://ofdollarsanddata.com/its-the-housing-stupid/
Lumber prices up 24% year to date.
https://www.calculatedriskblog.com/2025/08/update-lumber-prices-up-24-yoy.html
Early Q3 nowcasts.
https://www.calculatedriskblog.com/2025/08/early-q3-gdp-tracking.html
Store closings on pace to set record high. (I
don’t want to dismiss this as fear mongering, but we have known for a long time
that retail was overexpanding---long before recession fears arose.)
Overnight News
Bessent says tariffs could be dialed back if trade
deficit conditions improve between the US and its economic partners (he thinks
all ongoing trade negotiations will be concluded by Oct).
American companies are repurchasing their shares at a record pace,
boosting their balance sheets, and fueling the U.S. stock rally. U.S. companies
have announced $983.6 billion worth of stock buybacks so far this year, the
best start to a year on record. They are projected to purchase more than $1.1
trillion worth overall in 2025, which would mark an all-time high.
Monetary
Policy
M2 hitting all-time high.
https://www.zerohedge.com/markets/has-anybody-noticed-us-m2-hitting-all-time-highs
Update
on the Fed balance sheet.
Fiscal Policy
How
much more budget cutting can we do?
https://www.americanthinker.com/articles/2025/08/the_federal_job_cuts_disaster_that_never_was.html
Trump
is doing the right thing for the wrong reason.
Recession
Manufacturing
on the ropes?
https://econbrowser.com/archives/2025/08/manufacturing-on-the-ropes
The
pre-recession progression paradigm.
https://bonddad.blogspot.com/2025/08/applying-prof-edward-leamers-pre.html
Expect
negative revisions to GDI, spending and industrial production.
Tariffs
Another
analysts defends Trump’s tariff policies.
https://www.nytimes.com/2025/08/07/opinion/trump-trade-tariffs.html
This is a great piece on why the tariffs in
isolation are a counterproductive, inefficient economic policy. But it ignores
the unfair trading practices of our trading partners outlined in the preceding
article. If gains achieved by eliminating the inefficient and unfair trading policies
of our trading partners are greater than the loss of efficiency and lack of
fairness of our own policies, we are net ahead---a theme echoed in an article I
linked to last week---'the second best solution.’ I am not opining on who is
right. I am suggesting that the net benefit/harm of Trump’s tariff policies is
not all clear.
https://www.economicforces.xyz/p/6-reasons-why-tariffs-are-a-terrible
Investing
Latest from BofA.
https://www.zerohedge.com/markets/hartnett-ai-bubble-bursting-signal-watch
Value in a sea of risk.
https://evergreengavekal.com/blog/value-in-a-sea-of-risk/
Is the US still special?
https://www.advisorperspectives.com/commentaries/2025/08/08/special
Volatility is mean reverting; and
right now it is very low.
https://www.advisorperspectives.com/commentaries/2025/08/08/vanishing-act-volatilitys
JP Morgan says yield curve can
steepen on Trump’s Miran Fed pick.
Update on S&P 500 Q2 earnings.
https://talkmarkets.com/content/us-markets/sp-500-earnings-dashboard-25q2-friday-aug-8?post=514298
More on the risks in investing in
crypto.
https://www.ft.com/content/8a160bd3-c96d-468a-8052-b0aae43e5aea
News
on Stocks in Our Portfolios
What I am reading today
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