Monday, June 30, 2025

 

 

6/30/25

 

The Market

         

    Technical

 

Follow through we got---just not in the direction of my gut feeling. Ah well, it makes the summer nice. As you can see, the S&P re-established the uptrend off its 4/7 low, reset its very short term trend from a trading range back to up, left the average above all three DMAs and in uptrends across all timeframes. July is traditionally a good month for Mr. Market. So barring another s**t bomb from the Donald, we are likely to have smooth sailing over the near term. Given valuation levels, I am not making any new investments though traders might want to participate.

 

 


 

The long bond finally made some upside progress, having a good week, resetting its 50 DMA from resistance to support and seemingly about to challenge its 100 DMA. Given that it is in downtrends across all timeframes and still below its 100 and 200 DMAs, it needs more juice to the upside to warrant any opinion that a low has been made. However, if a recovery is in the works, it would help equities.

 

 


 

GLD finally showed a bit of weakness, bouncing lower off the upper boundary of its very short term uptrend (not that surprising or alarming). It did also push through its 50 DMA---a first potential sign of weakness. It remains above its 100 and 200 DMAs and it uptrends across all timeframes. So like TLT, we need to see more directional momentum before assuming change in trend.

 

Gold tends snaps.

https://www.zerohedge.com/the-market-ear/golds-trend-snaps-cheap-options-and-looming-cta-liquidation

 

Goldman on gold.

https://www.zerohedge.com/precious-metals/goldman-gold-tactical-downside-protection-structural-upside

 


 

 

 

The dollar failed its attempt at a rally and then made a lower low, nixing any thought of a rally.

 




            Friday in the charts.

                https://www.zerohedge.com/market-recaps/stocks-bonds-bitcoin-jump-gold-oil-dollar-dumped-during-dismal-data-week

 

            Friday in the technical stats.

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

            https://www.barchart.com/stocks/sectors/rankings

           

    Fundamental

 

       Headlines

             

              The Economy

                       

Lots of data last week. The indicators were balanced. Although the primary indicators were quite negative (two plus, one neutral, six minus---two of which were price related).

 

Overseas, the numbers were roughly balanced with only one inflation related indicator which was neutral.

 

Given the poor primary indicators in the US, I have to give the overall performance a negative rating. That make two weeks in a row and lifts the warning level to my ‘muddle through scenario. On the other hand, the lousy inflation stats veered back towards my ‘inflation is as good as it is going to get’ forecast.

 

Muddying everyone’s outlook are (1) the Trump/Powell standoff [i think that we need at least one more FOMC meeting before altering monetary policy], (2) the horrendously awful [fiscally irresponsible] big, beautiful bill, (3) the outcome of the new tariff policy not only on economic growth but also on inflation [although it appears that it will be less onerous than it could have been] and (4) the fallout from the US attack on Iran [I know everything seems to be coming up roses right now but I am still worried about ‘unintended consequences’].

 

Bottom line. Short term, the odds of recession are increasing ever so slightly, though I remain in the ‘muddle through’ camp.

https://econbrowser.com/archives/2025/06/business-cycle-indicators-the-slowdown-cometh

 

A warning.

https://bonddad.blogspot.com/2025/06/may-personal-income-and-spending.html

 

Longer term, current fiscal policy remains a major negative---as our ruling class debates details of the big, beautiful bill while leaving the overall bottom line (i.e., larger deficits, more national debt) unchanged. Which means slower growth and higher inflation.

https://www.realclearpolitics.com/articles/2025/06/25/debt-financed_splurges_are_a_dead_end_152952.html

 

As I noted above, there are plenty of factors that can turn my forecast on its head. So my conviction level is low.

 

That said, stocks love to climb the proverbial ‘wall of worry.’  Plus July is historically a good month for stock prices. That leaves me on the sidelines until the outlook becomes clearer.

 

US

 

                        International

 

Q1 UK GDP grew 0.7%, in line; Q1 business investment was up 3.9% versus +5.8%.

 

May Japanese industrial production rose 0.5% versus consensus of +3.5%; May YoY housing starts were down 34.4% versus -14.9%; May YoY construction orders were up 14.0% versus +18.0%.

 

May German retail sales fell 1.6% versus projections of +0.5%; June preliminary CPI came in at +0.1% versus +0.3%.

 

The June Chinese manufacturing PMI was 49.7, in line; the June nonmanufacturing PMI was 50.5 versus 50.3; the June composite PMI was 50.7, in line.

 

                        Other

                       

                          Corporate profit explosion stalls.

                          https://wolfstreet.com/2025/06/26/the-corporate-profit-explosion-stalls-in-q1-on-the-eve-of-the-new-tariffs/

 

                                                  Update on big four recession indicators,

                          https://www.advisorperspectives.com/dshort/updates/2025/06/27/recession-indicators-real-personal-income-may-2025

 

                                                  Real disposable income down in May.

                          https://www.advisorperspectives.com/dshort/updates/2025/06/27/real-disposable-income-per-capita-down-may-2025

 

                                                  Update on Q2 nowcast.

                          https://talkmarkets.com/content/us-markets/gdp-nowcast-dispersion-plus-slowing-final-sales-to-private-domestic-purchasers?post=506398

 

                        Overnight News

 

Congressional Budget Office said the Senate version of the Trump tax bill will add USD 3.3tln to US debt over the next decade.

 

Elon Musk posted on X that the latest Senate draft bill will destroy millions of jobs in America and cause immediate strategic harm to the country, while he added it is utterly insane and destructive, as well as gives out handouts to industries of the past while severely damaging industries of the future.

 

Trump floated the idea of keeping 25% tariffs on Japan’s cars as talks between the two nations continued with little more than a week to go before a slew of higher duties are set to kick in if a trade deal isn’t reached.

South Korea sees the need for trade negotiations with the US to continue past next week’s deadline as Seoul continues to seek exemptions from US tariffs including duties affecting the auto and steel industries.

 

Ukraine said Russia fired a record 537 missiles and drones yesterday, targeting seven regions. Meanwhile, Vladimir Putin expanded the range of information covered by a state secrecy law.

 

France’s finance minister said the EU can clinch some form of trade agreement with the US before a July 9 deadline.

 

Iran said it doubts the US-brokered ceasefire with Israel will last and warned of a firm response to any aggression. Meanwhile, an intercepted call showed Tehran felt the strikes on its nuclear program were less damaging than expected.

 

 

                        Fiscal Policy

 

              Senate passes big, beautiful bill.

              https://www.zerohedge.com/political/senate-republicans-revise-trump-tax-bill-win-over-holdouts-eye-july-4-passage

 

 

                        Tariffs

 

              Apparently, we have a deal with China.

                          https://www.bloomberg.com/news/articles/2025-06-27/china-says-it-confirms-trade-framework-details-with-us?srnd=homepage-americas&sref=loFkkPMQ

 

                          Canada scraps digital services tax.

              https://www.zerohedge.com/political/canada-scraps-digital-service-tax-us-tech-giants-revive-trade-talks

 

      Investing

 

                The latest from BofA.

            https://www.zerohedge.com/markets/hartnett-these-are-best-trades-second-half-2025

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

               

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Friday, June 27, 2025

The Morning Call---We need to pay for spending not rate cuts

 

The Morning Call

 

6/27/25

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/market-recaps/sp-surges-record-close-palladium-panic-bid-bond-yields-dollar-tumble

 

                Thursday in the technical stats.

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

            https://www.barchart.com/stocks/sectors/rankings

 

            The latest from Goldman’s trading desk.

            https://www.zerohedge.com/markets/top-goldman-macro-trader-buys-bitcoin-says-key-market-not-trend-not-valuation-not-liquidity

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

                          May pending home sales were up 1.8% versus forecasts of -0.3%.

                          https://www.advisorperspectives.com/dshort/updates/2025/06/26/pending-home-sales-up-may-2025-higher-than-expected

 

                                                  May PCE price index was +0.2% versus predictions of +0.1%.

 

May personal income declined 0.4% versus consensus of +0.3%; May personal spending was -0.1% versus +0.1%.

 

The June Kansas City Fed manufacturing index came in at 5 versus expectations of -5.

                          https://www.advisorperspectives.com/dshort/updates/2025/06/26/kansas-city-fed-manufacturing-activity-continued-decline-june-2025

 

                        International

 

                          May Chinese YoY industrial profits fell 1.1% versus estimates of +1.5%.

 

The May Japanese unemployment rate was 2.5%, in line; May retail sales were down 0.2% versus up 0.4%; June CPI was +3.1% versus +3.5%; June YoY core CPI was +3.1% versus +3.3%; June YoY core CPI, ex food and energy was +3.1% versus +1.9%.

 

The June EU economic sentiment index was 94.0 versus projections of 95.1; the June industrial sentiment index was -12.0 versus -9.9; the June services index was up 2.9 versus 1.6; the June consumer confidence index was -15.3, in line.

 

                        Other

 

                          More on the housing market.

  https://wolfstreet.com/2025/06/25/inventory-of-new-single-family-homes-for-sale-highest-since-2007-amid-record-pile-up-in-the-south-as-sales-drop-homebuilders-face-a-tough-market/

 

How worried should we be about yesterday’s continuing jobs claims number?

                          https://bonddad.blogspot.com/2025/06/jobless-claims-indicate-employment.html

 

                          This analyst thinks that we should.

                          https://www.zerohedge.com/markets/stocks-are-being-given-warning-they-shouldnt-ignore

 

                          How much will yesterday’s GDP numbers impact the Q2 now cast?

                          https://mishtalk.com/economics/unexpected-huge-negative-revisions-to-first-quarter-gdp-and-what-it-means/

 

            Overnight News

 

On whether the US Reconciliation Bill can be sent to President Trump by the July 4th deadline, Punchbowl says that it is possible but is becoming increasingly difficult; Senators say voting will not being until Saturday at the absolute earliest. "...one key holdout said they’re far from the point when Trump will be needed to help close a deal." Senators say voting will not being until Saturday at the absolute earliest, with that viewed as optimistic. Senate parliamentarian ruling focused on "the provider tax freeze in the bill rather than the Senate’s more drastic constraints for Medicaid expansion states, according to two sources with knowledge of the decision". Republicans believe they can come up with a fix. President Trump has reportedly told multiple GOP senators privately that he prefers the House’s provider tax framework, which is much less drastic than the Senate’s version.

 

A flurry of Federal Reserve officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way. After Waller and Bowman’s dovish commentary on lowering rates as soon as July, nearly a dozen policymakers have dumped cold water on that idea since then.

 

Europe considers a range of concessions to the White House in an effort to strike a trade deal in the near-term, including lowering tariffs on a range of imports, removing certain non-tariff barriers, buying more American products, and taking steps to address concerns about China. 

US President Trump said he just signed a deal with China on Wednesday, and says he has one maybe coming up with India. Trump added that China is starting to open up. It was later clarified that the US and China have agreed to an additional understanding to implement the Geneva agreement, according to a White House official cited by Fox’s Lawrence. A second Administration official confirmed that the framework finalizes what was agreed in London and also addresses Chinese export controls, according to a source familiar with the agreement.

 

China issues a statement on trade framework with US; two sides confirmed details on framework China will approve export applications for controlled items in accordance with the law. Both sides maintained close communications after meetings in London. The US side will accordingly lift a series of restrictive measures taken against China.

 

            Monetary Policy

 

              Does the data support a rate cut?

              https://talkmarkets.com/content/us-markets/rate-cut-rumors-does-the-data-back-one?post=506089

 

            Fiscal Policy

 

              How the dems view the big, beautiful bill.

              https://www.nytimes.com/2025/06/25/opinion/trump-republicans-megabill.html

 

              How effective is the debt limit?

              https://www.cato.org/blog/warren-trump-debt-limit

 

              We need to pay for the spending, not for the tax cuts.

              https://www.theunseenandtheunsaid.com/p/stop-saying-we-need-to-pay-for-the

 

Incompatible goals: lowering the trade deficit while raising the budget deficit. The math here is pretty simple: lowering trade deficit means fewer dollars to buy US Treasuries. A larger deficit means more Treasuries. So more supply with less demand equals higher rates.

  https://talkmarkets.com/content/economics--politics/the-us-government-incompatible-goals-eliminate-trade-deficits-while-running-large-fiscal-deficits?post=505765

 

 

            Tariffs

 

              Free trade is flourishing, just not in America.

              https://www.theunpopulist.net/p/free-trade-is-flourishing-just-not

 

            Geopolitics

 

              Continued uncertainty over Iran’s nuclear program.

              https://www.ft.com/content/0808eeb8-341c-4a4e-8ccf-0db07febef91

 

              Part 2.

              https://www.zerohedge.com/military/watch-live-pentagon-holds-irrefutable-press-conference-trumps-iran-strikes

 

              Victor Davis Hanson’s opinion.

              https://www.zerohedge.com/geopolitical/vdh-end-everyone-hated-iranian-theocracy

 

 

     Investing

 

            The dollar’s death is greatly exaggerated.

            https://www.advisorperspectives.com/commentaries/2025/06/25/dollars-death-greatly-exaggerated

 

            A sentiment shift favors dollar bulls.

            https://www.advisorperspectives.com/commentaries/2025/06/26/shift-favors-dollar-bulls

 

            Foreign bonds having a good year.

            https://www.capitalspectator.com/foreign-bonds-are-having-a-very-good-year-in-us-dollar-terms/

 

A great explanation of how the math of the Vix works and how it can be used in a predictive manner.

https://www.zerohedge.com/markets/get-fearful-when-stock-market-gets-greedy

 

And some charts to go along with the above.

https://www.zerohedge.com/the-market-ear/risk-20-sell

 

            The latest from Goldman’s head of strategy.

            https://www.zerohedge.com/markets/goldman-reignites-concentration-risk-concerns-amid-bad-breadth-dollar-divergence

 

    News on Stocks in Our Portfolios

 

Nike GAAP EPS of $0.14 beats by $0.02, revenue of $11.1B beats by $380M

 

What I am reading today

 

           

 

 

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