1/27/25
The Market
Technical
The good news is that S&P had a great week. The
bad news is that it pushed through its all-time high and then fell back. That
doesn’t mean that the rally is over; it just means that we need follow through
before getting jiggy.
TLT tried and failed to break even a very short
term downtrend. So, it remains below all DMAs and in very short term, short term,
and intermediate term downtrends. I have said several times over the last weeks
that TLT is a market in search of a bottom. That remains the case.
Gold maintained its upward momentum---likely on the
back of the continued weakness in the dollar. It looks like we will get a
challenge of its all-time high this week. If you traded this rally, I would
lighten up on any kind of weakness.
https://www.zerohedge.com/the-market-ear/golds-rally-silvers-lag-euros-bounce-and-vvixs-warning
The dollar’s very short term rally ended abruptly,
marking a new lower high and trading through its 100 DMA (now support; if it remains
there through the close Tuesday, it will reset to resistance). That is the bad
news. The good news is that it remains above its 200 DMA, in short and
intermediate term uptrends and has that massive gap down open that needs to be
filled. I am frankly a bit surprised at its weakness given all the rah, rah
American exceptionalism rhetoric coming out of Washington. Kinda reminds me of
the rise in long rates after the Fed cut short rates, i.e., maybe that dog won’t
hunt.
Friday in the charts.
Fundamental
Headlines
The Economy
The stats last week were balanced as were the primary
indicators (one up, one down). Overseas the data was quite positive, dominated
by the upbeat PMI numbers. So, stats continue to track a ‘muddle through’
scenario.
Of course, the economic scene was dominated by the
political---with Trump issuing multitudinous executive orders as well as press
statements on his intended actions, equally divided between what I consider positive
and economically incoherent.
There was only one inflation number; and that was
Japanese CPI which was higher than anticipated. On the other hand, the Donald tempered
his tariff threats and the house (for once) made some welcome cost cutting
noise. How far that gets is anyone’s guess; but there at least there is hope.
Bottom line: there is nothing in the data that
raises a doubt on my the economy ‘muddles through’ scenario. On the other hand,
Trump’s and the house’s rhetoric somewhat confuse the inflation outlook. But
until there is something solid to hang my hat on, I am sticking with my opinion
that inflation has likely seen its lows.
US
The December Chicago
Fed national activity index was reported at +.15 versus estimates of +.10.
International
The January German business climate index came in
at 85.1 versus expectations of 84.7; the January current conditions index was
86.1 versus 85.4.
Other
A rebound in capital spending.
https://dailyshotbrief.com/the-daily-shot-brief-january-24th-2025/
LA ports December inbound traffic increased
dramatically.
https://www.calculatedriskblog.com/2025/01/la-ports-inbound-traffic-increased.html
A deep dive into the recent existing home
sales number.
https://bonddad.blogspot.com/2025/01/sales-prices-and-inventory-in-existing.html
Overnight
News
Nvidia shares tumbled premarket as Chinese
startup DeepSeek’s lower-cost AI model — which Marc Andreessen called “AI’s
Sputnik moment” — cast doubt on sky-high tech valuations. Nasdaq futures fell
more than 4%, putting broader tech stocks on track for a $1 trillion wipeout.
ASML dropped more than 10%. DeepSeek’s AI assistant overtook ChatGPT to become
the top free app on the US App Store.
More details:
https://www.zerohedge.com/technology/chinas-deepseek-bombshell-rocks-trumps-500bn-ai-boondoggle
And:
https://www.zerohedge.com/the-market-ear/venom-fang-heart-ai-bull
Deepselling
triggers panic.
https://www.zerohedge.com/the-market-ear/deepselling-triggers-panic
Fiscal Policy
Politicians who try to
circumvent markets eventually lose.
https://www.capitalspectator.com/trump-says-hell-demand-that-interest-rates-drop-immediately/
Investing
The latest from Goldman’s trading desk.
More.
Market returns with new presidents.
https://quantifiableedges.com/market-returns-with-new-presidents/
The devolution of capital markets.
https://disciplinefunds.com/2025/01/22/the-devolution-of-public-us-capital-markets/
Time to review your portfolio’s asset
allocation.
A guide to better portfolio returns in 2025.
https://www.advisorperspectives.com/commentaries/2025/01/24/gardening-guide-better-portfolio-2025
Earnings reports for the Mag 7 dead ahead.
MARKET CALL: Will DeepSeek Sink The Unsinkable
Mag-7?
Confidence is surging; will economic
growth follow?
Inauguration Sends Confidence Surging Higher - RIA
News on Stocks in Our Portfolios
What I am reading today
The
ruling class’s next existential threat.
https://www.zerohedge.com/geopolitical/davos-un-introduces-ai-next-existential-threat
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