4/14/25
The Market
Technical
We got a second unnerving week in a row. The good
news is that the pin action wasn’t all to the downside. Indeed, one could argue
that the S&P having tested both the lower boundary of its intermediate term
uptrend and the 38.2% Fibonacci level and held, a bottom has been made. And
that large gap down open overhead adds some magnetic pressure to the upside. Of
course, that doesn’t mean that the low won’t be retested; and if history any
guide it is likely to be. But if a bottom has been made, then it will be time
to get serious about spending some cash.
That said, notice that the 50 DMA is about to cross
under 200 DMA. It is called a death cross and it is for a reason---historically,
bad things happen following such an event.
So things could get tricky depending on follow
through. Bottom line: I have my list and I am checking it twice. But I have my
eye on both the above patterns and I am not looking to be a hero.
Sentiment stays bearish.
https://www.bespokepremium.com/interactive/posts/think-big-blog/sentiment-stays-bearish
No real method to this technical madness.
https://www.priceactionlab.com/Blog/2025/04/the-year-of-the-tails/
The latest from Goldman’s head of hedge fund
trading.
More from Goldman traders.
Is the worst case priced in?
https://www.zerohedge.com/the-market-ear/when-economists-are-bearish
Unusual behavior from the VIX.
https://www.zerohedge.com/markets/vix-didnt-break-latest-volatility-shock
Somewhat surprisingly, while the long bond shared
the S&P’s volatility, it was all to the downside. Ordinarily, in period of
high investor uncertainty, TLT, as a safe haven, would have an upward bias. Certainty,
the other well-known safe haven (i.e., gold) functioned as expected. Consensus
opinion is attributing this aberrant behavior to confusion on US economic
policy, anti-US sentiment of foreign investors generated by Trump’s tariff
antics and the assumption that the Fed is frozen into inaction because it is between
a rock (fear of inflation) and a hard place (fear of recession). Unfortunately,
it supports the current long term downtrend, i.e., it is challenging the lower
boundary of its intermediate term downtrend and below all DMAs. This is not a
plus for either bonds and the economy.
Not much to add to prior comments. GLD aggressively
resumed its upward momentum aided by Trump generated chaos. 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.
More room to run.
https://www.zerohedge.com/markets/citis-former-global-strat-head-gold-more-room-run
JP Morgan and
Goldman upgrade precious metals outlook.
The dollar continued its slide mainly for reasons
outlined in the above comment on the long bond. 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.
Fundamental
Headlines
The Economy
Not a lot of stats last week, but what we got was
very upbeat, especially the primary indicators (three plus, no neutral, no
negative). So, still few signs of recession.
https://bonddad.blogspot.com/2025/04/real-hourly-and-aggregate-pay-for.html
Helping a bit was Trumps’ crawfishing on tariffs. ‘A
bit’ being the operative words since no one has a clue about what he will do
next. That said, he did step in immediately when the credit markets started to
crash. So all that rhetoric about not caring what happens in the Market was
just that---rhetoric.
To be sure, the chaos isn’t over---serenity is just
not the Donald’s style. But as I noted last Thursday, the downside in economic
disruption and Market valuation has likely been truncated.
https://scottgrannis.blogspot.com/2025/04/trumps-tariffic-mistake.html
And don’t forget the Fed.
https://www.ft.com/content/0273371d-b90c-43e4-845a-e51982dd4fdf
Staying with a more positive tone, two of those
upbeat primary indicators were inflation related. So my forecast that lower
prices are wistful thinking isn’t proving out---at least not yet. I can’t hold
on the that notion much longer.
Bottom line: I remain clueless about the ultimate
impact of Trump’s tariff policy; but we now have a sense of where the Trump Put
exists. Still, I leave my outlook on the economic growth and inflation in
suspended animation until we get more clarity.
Finally, I do want to clear about how unclear the
current economic/political landscape is.
As you know, I am not a supporter of tariffs in general and even more so
of some of the particulars of the Trump program (e.g. why put a tariff on
something like bananas, vanilla, cocoa which we don’t have the climate to
produce but which we want? why put tariffs on countries we run a trade surplus
with? why put tariffs on a country with which you just negotiated a tariff
treaty)?
That said, what if all Trump is trying to do is
create shock and awe in order to (1) convince our trading partners that he is
dead serious about righting the true inequities in current trade regime and (2)
speed up the process of reordering the US trade policy quickly enough to insure
that any negative fallout will be behind us by the time the mid-term elections
arrive.
All the above are questions to which I have no
answer. But I am suggesting the possibilities that Trump could either be an
economic moron or crazy like a fox. And at the moment, I have no idea which it
is. But neither should be ruled out when thinking about your investment
strategy for the future.
US
International
February Japanese industrial production was up 2.3%
versus forecasts of +2.5%; capacity utilization was down 1.1% versus -0.6%.
Other
Update on Q1 nowcasts.
https://www.calculatedriskblog.com/2025/04/q1-gdp-tracking-near-zero-growth_0153707245.html
Tariffs
What
is next?
The emerging Trump doctrine.
https://www.americanthinker.com/blog/2025/04/the_emerging_trump_trade_doctrine.html
Calling Trump’s
bluff.
https://www.zerohedge.com/markets/i-call-your-bluff
Investing
Lance Roberts doesn’t think that the decline
is over.
https://talkmarkets.com/content/stocks--equities/the-pause-heard-around-the-world?post=491811
Part 2.
Basis Trade Sent Yields Soaring - Is It A Warning?
- RIA
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-long-2s-short-spoos-until-powell-panics
News on Stocks in Our Portfolios
What I am reading today
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