4/28/25
The Market
Technical
Finally, a decent week of technical action for a
change. The S&P was up (1) made its first higher low [hopefully confirming April
7th as The low] and (2) broke above both the 23.6% Fibonacci
retracement level as well as the downtrend off its February 19 high. If it
remains there through the close on Tuesday those breaks will be confirmed. On
the other hand, (1) in the process, it created a large gap up open which will
need to be filled and (2) it remains below all DMAs. All in all a ray of hope that the worst is
over. If we get some follow through to the upside, then I will likely put some
money to work on the next pullback. I did add to my Nike position at the close
on Friday.
The latest from Goldman’s trading desk.
The long bond made some additional progress in its
bounce off the lower boundary of its short term trading range. ‘Some progress’
being the operative words. It can certainly be argued that the bounce
represented a successful test of the January 14th low. In light of
the better performance from the S&P, I am taking it as such but the
obstacles they both have to overcome, i.e., tariff chaos, inflation fears,
declining dollar are more impactful on TLT than the S&P. So I am less confident
in any recovery.
GLD was off for the week. But it was so stretched
to the upside that some correction was inevitable. So I don’t think a down week is anything to
get nervous about. It remains well within a very short term
uptrend and in uptrends across all other time frames as well as above all DMAs. Let’s see where
the correction goes but for the moment, I would stay with what works.
https://www.zerohedge.com/precious-metals/case-tactical-gold-pullback-nomura
The dollar was up with everything else; although its
rally was even less impressive than that of the long bond. The good news is
that Trump’s attempt to oust Powell is off the table. Unfortunately, with the
rest of the world pissed off at Trump over the tariff chaos, I’m not sure pressure
won’t continue on the dollar. And remember, if Trump were to get his way and
our trade deficit shrunk, that would be bad news for the dollar. So, I am having
a tough time seeing any reason for a longer term recovery in the dollar.
Friday in the charts.
Fundamental
Headlines
The Economy
Last week, the stats were tilted to the negative
side, including the primary indicators (two up, three down). So another (second
in a row) week of downbeat data---though not enough to signal recession---but
enough to suggest ‘muddle through’.
The big news of the week was the Trump Blink: (1)
backing off the threat to fire Powell and (2) moving to defuse his China
standoff.
As to the latter, we now know for sure that there
is a Trump Put and roughly at what level it exists. That is almost certainly a
positive short term. Longer term, he could have saved everyone a lot of grief
if he hadn’t insisted on pursuing a hard guy, ‘art of the deal’ strategy and
just focused on the specific areas of inequity. We can only hope that maybe,
just maybe, some good will come of his (to date) inexplicably illogical tariff
policy meanderings.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5210267
World finance ministers are dazed and confused.
To be sure, I don’t fault the Donald for working to
right some trade imbalances. But so far, I would judge the ‘art of the deal’ to
be a f**king disaster; and unfortunately, likely a longer term negative (1) for
our relations with our allies and (2) in his ability to implement his domestic agenda
[which I believe would be a major plus for the economy].
Bottom line. Short term, the odds of recession have
likely decreased, but longer term though Trump’s self-induced chaos will only
hamper economic growth. Nonetheless, I am reinstating my ‘muddle through’
forecast. I am less sure about inflation and I am leaving that prediction in
abeyance pending more clarity.
US
International
Other
Consumer sentiment falls for fourth straight
month.
Overnight
News
US Treasury
Secretary Bessent said he had interaction with his Chinese counterpart in Washington last week and
thinks the Chinese will see the tariff level as unsustainable and he also
thinks there is a path to an agreement with China on tariffs, according to ABC
News. It was separately reported that Bessent had met with Japanese Finance
Minister Kato on Thursday and held productive discussions across a broad range
of bilateral issues including reciprocal trade, while he was said to be
encouraged by discussions with South Korean officials that focused on an
‘expanded equilibrium’ which encourages rather than restricts trade.
China has reportedly quietly exempted some US-made
products from tariffs with Beijing said to have been canvassing companies and
waiving duties on US goods in sectors where there is a lack of alternatives,
according to WSJ.
Fox’s Gasparino posted on X that the Trump
Administration would like to roll out trade deals this week, at least the
outlines that have been agreed upon, citing sources close to the matter.”
However, he also noted there are a lot of moving targets that could delay
matters, while the deals on deck include India, Japan and maybe South Korea and
Australia, although the White House spokesperson didn’t respond to a request
for comment.
Fiscal Policy
Red light blinking in US Treasuries
market.
Investing
Update on Q1 earnings dashboard.
Your memories can deceive you.
The latest from BofA.
https://www.zerohedge.com/markets/sell-rips-hartnett-says-3bs-saved-market-now-its-all-3cs
Ten rules from legendary investors.
Speculator Or Investor? 10-Rules From Legendary
Investors - RIA
The logic based approach to volatility.
Spock And The Logic Based Approach To Volatility -
RIA
News on Stocks in Our Portfolios
What I am reading today
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