1/21/25
The Market
Technical
The mini correction stopped dead in its tracks last
week, (1) bouncing off the lower boundary of its very short term uptrend and
its 100 DMA, (2) resetting that 100 DMA from resistance to support and (3)
pushing through its 50 DMA [if it remains there through the close today, it
will rest to support] and the downtrend from its December all-time high. Still, it needs to make a higher high before
I feel confident that the worst is over near term.
The significance of a big one day rally (but
we have had three in a row).
This week’s bull/bear report.
Technical Bounce On Inflation Data - RIA
Time for a Brazilian butt lift?
https://www.zerohedge.com/the-market-ear/are-you-ready-brazilian-butt-lift
TLT also managed to recover---the difference being
that 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. Whether or not that has occurred is
a matter of time. I would do nothing until it is clear that last week’s pin
action is more than a bounce in a bear market.
Long rates are too high.
https://www.apolloacademy.com/long-rates-are-too-high/
Gold was up on the week, continuing the surge above
the downtrend off its October high. However, it failed to make a higher high. I
believe that it probably will make it to its former all time high (and the
upper boundary of its very short term trading range), especially if TLT
continues to rally.
https://www.zerohedge.com/precious-metals/next-phase-golds-bull-market-has-just-begun
The dollar continued its recovery and further
improvement is likely due to (1) the economic numbers are favoring a strong
dollar and (2) its longer term technical picture has some positives: it is [a]
above its 100 and 200 DMAs, [b] in short and intermediate term uptrends and [c])
has that massive gap down open that needs to be filled.
Friday in the charts.
Fundamental
Headlines
The Economy
The stats last week in total were slightly upbeat
as were the primary indicators (three up, two down). However, three of the
positive indicators were not just good, they were off the charts (recall I
wrote ‘no misprint’ three time). Overseas the data was quite positive. So, the
numbers continue to track a ‘muddle through’ scenario (despite last week strong
showing, remember the prior week was negative).
The inflation reports were mixed---one positive,
one negative in the US: two positive, one negative overseas. And interest rates
backed off their recent surge higher---likely the result of those strong ‘no
misprint’ stats. Add in the inflationary implications of the Donald’s stated
intention to raise tariffs and cut taxes and you have strong support for my
‘inflation is as good as its going to get’ call.
Bottom line: my outlook remains: (1) the economy
‘muddles through’ and (2) inflation has likely seen its lows.
US
International
November Japanese machine tool orders were up 3.4%
versus consensus of -0.4%.
November EU construction output rose 1.3% versus
predictions of +0.6%.
November UK (3mo/Y) average earnings rose 5.6%, in
line; the November UK unemployment rate was 4.4% versus 4.3%.
December German PPI fell 0.1% versus estimates of
+0.3%.
The January EU economic sentiment index came in at
18 versus projections of 16.9; the January German economic sentiment index was
10.3 versus 15.3; the January German current conditions index was -90.4 versus
-93.0.
Other
Update on big four recession indicators.
Economic policy uncertainty index.
https://www.policyuncertainty.com/index.html
Macro questions going into inauguration.
Monetary Policy
We
still have an inflation problem.
Fiscal Policy
Reducing spending is the key to growth.
https://www.cato.org/blog/reducing-spending-now-key-growth-not-austerity
The bond market versus Trump.
https://www.ft.com/content/72019cc6-89f9-453c-9955-4cc26be3de3e
Executive orders
https://www.zerohedge.com/commodities/trump-declare-national-energy-emergency
Tariffs
Goldman
of Trump’s tariffs comments.
https://www.zerohedge.com/markets/goldman-views-trumps-day-one-trade-policy-more-benign-tone
Quote
of the day.
https://cafehayek.com/2025/01/quotation-of-the-day-4892.html
Tariffs stand in the way of economic success.
https://www.wsj.com/economy/trade/donald-trump-economy-tariffs-60408258?mod=economy_lead_pos1
Investing
The latest from BofA.
The Market mood is swinging to short term
bullish.
https://www.zerohedge.com/markets/market-mood-swinging-short-term-bullish
I agree with the conclusion but not the
premise.
Are blue skies ahead for crypto?
https://nypost.com/2025/01/16/business/new-trump-ends-crypto-communitys-government-harassment/
Investor Alert
At the Market open, the High Yield Portfolio will
buy a one half position in Eversource Energy (ES) and the Dividend Growth Portfolio
will Buy one half positions in Amgen (AMGN), Hershey (HSY and Constellation Brands
(STZ).
News on Stocks in Our Portfolios
What I am reading today
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