5/12/25
The Market
Technical
The S&P eked out a gain on the week but remained
below its 200 DMA. As I noted last week, that is my near term focus. If the
S&P can push through it, then it highly likely that the bottom has been
made and 2025 will be another up year---barring, of course, another
Trumpian-induced clusterf**k. On the other hand, if it is unable to mount that
resistance level (currently at ~5749), a test of the lows can’t be ruled out. I
continue to believe that we have seen the worst, again absent a random or Trump
initiated negative surprise.
Key S&P model turns bearish.
The latest rom Goldman’s trading desk.
The latest ‘follow through’ day.
https://www.investors.com/how-to-invest/investors-corner/sp500-nasdaq-palantir-pltr-stock/
The long bond quietly meandered through the
week---much like the S&P. Only its direction was down. There remains the possibility
of its retesting its lows. I continue to be highly uncertain about the forces
of inflation, hence the likely direction of Fed policy, hence the ultimate direction
of interest rates (bond prices). Higher tariffs could mean higher inflation
(and hence higher interest rates); but it could also mean higher unemployment
suggesting lower interest rates. On the
other hand, lower tariffs and a stronger economy could also mean higher
interest rates. You see the problem and why I have backed off any inflation/interest
rate forecast. Although surely, the chance of a more sanguine outlook on
tariffs (hence inflation) will cushion any momentum to the downside.
GLD’s performance mirrored that of the S&P---it
traded aimless but slightly to the upside. So nothing really changed: 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.
The dollar inched even higher last week though it
remained solidly in a downtrend and below all three DMAs. Until it can show any
solid signs of recovery, the assumption has to be that it is heading lower.
Friday in the charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/sectors-heat-map
Fundamental
Headlines
The Economy
It was a slow week for US stats. What we got was
very slightly positive (no primary indicators).
So nothing that would warrant me backing off my concern about recession;
but nothing that would increase it.
Overseas, the numbers were extremely upbeat. That
does assuage my recession anxieties somewhat.
The other notable development was the change in the
mainstream medias narrative about tariffs/the economy---from projecting
disaster to comments that suggest that maybe it can be avoided. I am not sure
what that is worth given my extremely low opinion of their views. But if they
are starting to hedge their ‘end of the world’ rhetoric, maybe they are getting
apprehensive that conditions may not be as bad as they have been projecting.
Apparently for good reason.
Not to be repetitious, but while I have made it
clear how opposed I am to Trump’s tariff policy as originally presented (except
in the case of the Chinese and those instances where opposing tariffs were
extremely punitive), I allowed that I had no idea about his end game---which
may not result in a scenario nearly as bad as I feared. Judging by the terms of the US/UK agreement
thus far revealed (recognizing that one occurrence doesn’t make a case), the
media is probably smart to start crawfishing on their ’economic disaster’ story
line.
https://www.zerohedge.com/markets/financial-medias-tariff-incontinence-retrospective
That doesn’t mean that there are not going to be
problems especially with respect to the trade with the Chinese, damage to our
relations with allies and lessening the chances of getting Trump’s domestic
agenda passed. So I am not sounding an ‘all clear’ signal. I am saying that the
downside economically/Marketwise is likely shrinking.
Bottom line. Short term, the odds of recession are
still higher than they were two weeks ago; though longer term, if the US/UK
trade deal is any sign, the damage from Trump’s self-induced chaos may be less
than originally feared. I remain too unsure about inflation to offer a
prediction.
US
International
April Chinese YoY auto sales rose 9.8% versus
forecasts of +7.0%.
Other
Rail car loadings up in April.
https://www.calculatedriskblog.com/2025/05/aar-rail-carloads-and-intermodal-up-in.html
Monetary Policy
Things
are about to get complicated.
Recession
So
far, not happening.
Part
2.
https://bonddad.blogspot.com/2025/05/more-fuel-to-help-consumers-deal-with.html
Or
is it already over?
DEEP DIVE: Is The Recession Over Already?
Employment
confirms that the economy is slowing.
Employment Data Confirms The Economy Is Slowing -
RIA
Tariffs
US/China reach temporary agreement.
https://www.zerohedge.com/markets/us-china-reach-agreement-lower-tariffs-90-day-cool-period
Investing
The latest from BofA.
The future.
Did Trump just tell us what is coming?
https://talkmarkets.com/content/us-markets/president-trump-just-told-us-whats-coming?post=496735
Six reasons the Market uncorrected.
https://www.downtownjoshbrown.com/p/six-reasons-we-uncorrected
ETH and bitcoin prices surge.
News on Stocks in Our Portfolios
What I am reading today
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