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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