4/7/25
The Market
Technical
Well, wasn’t that fun. The S&P did a cliff dive on Thursday and
Friday, taking out the March 13 low, the 23.6% Fibonacci retracement level, the
lower boundary of its short term uptrend and the lower boundary of the very short
term trading range. Next stop is the lower boundary of the intermediate term uptrend
(~4896). I am not saying that we will get there; but at the moment, it seems reasonable.
At some point, I expect some sort of reflexive bounce especially given those
two massive gap down opens.
The latest from Goldman’s trading desk.
The latest form Goldman’s flows guru.
https://www.zerohedge.com/markets/cta-selling-back-vengeance-and-its-about-get-very-ugly
How low can it go?
https://www.zerohedge.com/markets/crashes
Beyond panic.
https://www.zerohedge.com/the-market-ear/beyond-panic-fortune-favors-brave
And now for some perspective.
https://www.zerohedge.com/markets/inevitable-just-sooner
Part 2.
https://www.zerohedge.com/the-market-ear/why-trump-tariffs-are-smart
As one might expect in the midst of a stock market
collapse, investors headed towards bonds. On Friday, TLT made a third higher
high and began a challenge of its 200 DMA. Since it negated a very short term downtrend
in late February, the question on my mind has been---did the mid-January low confirm
the bottom of the secular downtrend that began in March of 2020? It appears
that has occurred though I would like to see the long bond make one more higher
low and higher high before making that call.
While GLD suffered with everything else last week,
there no real technical damage to the chart. It remains well within a very
short term uptrend and in uptrends across all other time frames as well as
above all DMAs. Stay with what works.
While the dollar continued its slide, it did make a
strong reversal of Friday, closing much of Thursday’s huge gap down open. I am assuming that investors running to bonds
(safe haven) explains that pin action. Nonetheless, it remains in a confirmed
downtrend---below all DMAs and in a very short term downtrend---and that likely
won’t change as long as the Donald is hell bent on his weak dollar program.
Friday in the charts.
https://www.zerohedge.com/markets/surveying-carnage-after-week-when-decades-happened
Fundamental
Headlines
The Economy
Last week’s stats were upbeat as were the primary
indicators (one plus, one neutral, no negative). So, we are now at five weeks
in a row of relatively positive data. Unfortunately, I am not sure that means
much since the numbers are all backward looking and we now have a tariff regime
that (1) is unexpectedly harsh which increases the likelihood of recession but
(2) we have no idea how permanent it is.
The latter point is perhaps the most important
because it raises the level of uncertainty to an unnerving level---to such an
extent that it is nearly impossible to forecast the impact on economic growth, employment,
and inflation.
https://www.calculatedriskblog.com/2025/04/fed-chair-powell-tariff-increases-will.html
That is not good for the economy (businesses
decision making process freezes up) or the Market (which hates uncertainty).
https://thehill.com/opinion/5229397-wealth-inequality-consumption/
Stocks understand that tariffs are a tax on
corporate profit margins.
https://wolfstreet.com/2025/04/03/103178/
Tariffs will also likely negatively impact capital
flows.
https://www.ft.com/content/c5648017-2357-4dc1-a33b-809bd8561275
The only sensible solution is to admit that I am
clueless, turn on the red warning light, do nothing BUT monitor future Buy
candidates and await the opportunity to put my cash to work.
I should add that, in my opinion, this mess could
turn out better than what seems to be general consensus at the moment. The fact
is we simply don’t know. But before I get permanently beared up, I want to see
how this unnecessary trauma gets resolved.
https://issuesinsights.com/2025/04/03/if-trumps-tariffs-work-it-will-be-epic/
And.
https://www.foxnews.com/opinion/trumps-liberation-day-no-cause-panic-here-5-reasons-why
Bottom line, I am suspending any forecast on
economic growth and inflation until we get some clarity.
US
International
The February Japanese preliminary leading economic
indicators were reported at 107.9 versus forecasts of 107.8.
The February German trade balance was E17.7 billion
versus projections of E17.8 billion.
February EU retail sales were up 0.3% versus
estimates of up 0.5%.
Other
The last good employment report?
https://bonddad.blogspot.com/2025/04/march-jobs-report-possibly-last-good.html
Friday in the economic charts.
https://dailyshotbrief.com/the-daily-shot-brief-april-3rd-2025/
Monetary Policy
Update
on the Fed’s balance sheet.
Recession
Update
on big four recession indicators.
https://www.advisorperspectives.com/dshort/updates/2025/04/04/the-big-four-recession-indicators
One
of Fed’s favorite recession indicators is flashing red.
https://www.reuters.com/markets/us/one-feds-top-recession-alarms-sends-2008-style-signal-2025-04-04/
US
services sector at risk in trade war.
https://www.capitalspectator.com/us-services-sector-an-exporting-powerhouse-at-risk-in-trade-war/
Tariffs
The faulty math in the ‘Liberations
Day’ tariffs.
The "Liberation Day" Tariffs Crash The
Market - RIA
The case for Trump’s strategy.
Vietnam,
Taiwan capitulate.
https://www.zerohedge.com/markets/vietnam-capitulates-offers-remove-all-us-tariffs
Investing
S&P 5000 or 3100?
https://www.zerohedge.com/the-market-ear/sp500-5000-or-3100-call-it
The latest from BofA.
News on Stocks in Our Portfolios
What I am reading today
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