Saturday, May 24, 2025

Monday Morning Chartology--early

 

 

5/26/25

 

I am off on a two and half week vacation in Europe. Be back on 6/16. Enjoy your Memorial Day weekend.

 

 

The Market

         

    Technical

 

Not a great week for the S&P. Between the latest Trump tariff tantrum and the disappointedly, fiscally irresponsible Big, Beautiful Bill, neither stock nor bond investors were very happy. The index ended the week having broken the uptrend off its April 7th low and hanging precariously above its 100 and 200 DMAs. The only thing to do now is see whether the S&P will regain that uptrend or reset those two DMAs. If the latter, then the next visible support level is the 50 DMA (~5584). Follow through.

 

 


 

As I noted above, the long bond didn’t fare any better than the S&P. It pushed through (1) the lower boundary of its very short term trading range---resetting it to a downtrend and (2) the lower boundary of its intermediate term downtrend. That leaves TLT in downtrends across all time frames and below all DMAs. If the bond vigilantes are getting serious about refusing to go along with these spendthrift morons in the ruling class, expect more downside.

https://www.zerohedge.com/the-market-ear/end-era-8-incredible-charts-bond-markets

 

Watch the Japanese long bond.

            https://www.zerohedge.com/the-market-ear/want-know-where-markets-go-next-watch-japans-long-bond

 

 


 

GLD performed pretty much as expected given the tariff and budget news---bouncing off its 50 DMA and rallying nicely on the week. Near term, I would expect it to continue to react inversely with bond and stock markets (i.e., rally off a further deterioration in fiscal policy). 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.

 

 

 


 

 

 

Unsurprisingly, the dollar followed the same playbook as the rest of the indices---which is to say it got hammered. So for the moment, the assumption remains that it is heading lower.

 

 


 

 

 

            Friday in the charts.

            https://www.zerohedge.com/market-recaps/dollar-crashes-18-month-lows-after-trump-tantrum-bitcoin-gold-near-record-highs

 

            Friday in the technical stats.

            https://www.barchart.com/stocks/momentum

            https://www.barchart.com/stocks/sectors/sectors-heat-map

           

    Fundamental

 

       Headlines

 

              The Economy

 

The US stats last week were mixed as were the primary indicators (one plus, one minus). Ditto, the international numbers. So, no real reason here to contemplate altering my forecast---a ‘muddle through’ economy.

 

I noted last week that the caveat to this outlook was that we can’t dismiss entirely the risk of another nuclear blast coming out of the White House that would again raise the odds of recession.

 

And, of course, we got one on Friday when Trump made a new set of threats against Apple and the EU for not bending to his will. If this follows what has become the standard script, the parties will have a conversation, kiss and make up and this will be another of those ‘much to do about nothing’ incidents.

https://www.bloomberg.com/news/articles/2025-05-23/trump-threatens-a-50-tariff-on-eu-goods-starting-in-june?sref=loFkkPMQ

 

That said, the almost continuous state of uncertainty fostered by Trump’s trade policy is likely having an impact on businesses willingness to make long term investment decisions which almost certainly has a dampening effect on economic growth---hence, recession remains a risk.

 

To make matters worse/more uncertain, the bond vigilantes apparently woke up to the fact that fiscal profligacy reigns supreme both here and abroad---apparently triggered by the house’s passage of the Big, Beautiful Bill. The Japanese and US bond market were especially hard hit.

 

What is most concerning is prospect that the markets have finally reached the end of their patience with the budgetary malpractice of the ruling class and are about to impose the kind of discipline (refusal to buy) that will make for a very rough ride in the securities markets.

https://www.wsj.com/economy/central-banking/bond-market-yields-government-borrowing-4a78af80?mod=economy_lead_pos1

 

 

And.

https://www.capitalspectator.com/inflation-anxiety-and-the-big-beautiful-bill/

 

I am not making that my forecast---yet. But I am pushing the yellow warning light. Unfortunately, if this is a false alarm and it doesn’t lead to a change in fiscal policy, the impact will be all that more painful when it finally does occur.

 

Bottom line. Short term, the odds of recession, in my opinion, remain low. Longer term, the inflation outlook is more visible and getting worse.

 

                        US

 

                        International

 

                        Other

                       

                          The death of the penny (speaking of inflation---which I wish I weren’t).

                          https://politicalcalculations.blogspot.com/2025/05/the-day-penny-died.html

                         

                          A deep dive into the housing market.

                          https://bonddad.blogspot.com/2025/05/new-home-sales-make-3-year-high-as.html

 

                Fiscal Policy

 

              Regime uncertainty versus market uncertainty.

              https://thedailyeconomy.org/article/regime-uncertainty-and-market-uncertainty/

 

                Tariffs

 

              The negative impact of tariffs on earnings.

              https://www.apolloacademy.com/the-negative-impact-of-tariffs-on-earnings/

 

                   And now for some good news. Trump endorses Nippon Steel/US Steel deal.

              https://www.zerohedge.com/markets/trump-endorses-us-steel-nippon-deal

 

      Investing

 

                Big oil just went big AI.

            https://investorplace.com/hypergrowthinvesting/2025/05/big-oil-just-went-big-ai-the-trillion-dollar-shift-reshaping-the-future/

 

                The anchoring problem and how to solve it.

            https://talkmarkets.com/content/stocks--equities/the-anchoring-problem-and-how-to-solve-it?post=499239

 

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

 

 

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