7/7/25
The Market
Technical
The S&P maintained its upward momentum, keeping
it above all three DMAs and in uptrends across all timeframes. And it
will likely continue over the short term: (1) July is traditionally a good
month for Mr. Market. (2) The big, beautiful bill passed (though I have no idea
why it is being interpreted as a positive). …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.
Retail buying blows away all records.
https://www.zerohedge.com/markets/retail-buying-and-participation-blow-away-all-records-h1-2025
Investor greed returns with a vengeance.
https://www.zerohedge.com/markets/investor-greed-returns-vengeance
Well, at least the bond guys seem to understand the
significance of the fiscal irresponsibility contained in the big, beautiful
bill. TLT couldn’t push above its 100 DMA (now resistance) and subsequently
traded down and is about to challenge its 50 DMA (now support). Given that it
is in downtrends across all time frames, below its 100 and 200 DMAs and facing
increased inflation from the BBB, the assumption has to be that there is more
downside.
GLD was flat on the week. The good news is that it
(1) failed to successfully challenge its 50 DMA (now support support), (2) remains
above its 100 and 200 DMAs and (3) is in uptrends across all timeframes. The
inflationary implications of the BBB should keep it on an upward trajectory.
Although the dollar made a feeble attempt at a
rally on Thursday, it remains the ugliest chart on the block. But…...
Dollar despised but no new low.
https://www.zerohedge.com/the-market-ear/dollar-despised-no-new-lows-week
Friday in the charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
Fundamental
Headlines
The
Economy
The stats last week were tilted positively while
the primary indicators were balanced (one plus, one neutral, one minus). Overseas,
the numbers were very upbeat.
That breaks the two string of negative
performances, making me feel a bit better about my ‘muddle through’ scenario. There
were no US inflation numbers though internationally there was one positive and
one neutral. For the moment, that isn’t impacting my ‘inflation is as good as
it gets’ forecast.
On the policy front:
(1) Powell hinted that he may be crawfishing on no
rate cut in July [not bloody likely given the BBB],
(2) the big, beautiful budget bill has become a
reality [the reason why lowering rates would be a mistake---in my opinion],
This is a reasoned response to my concern
about the BBB which I think has to be considered. I am not suggesting that the
author is right; but it is a factor to watch for. Clearly, it depends on
whether Trump/ the GOP ability to roll back the giveaway to the dems.
(3) some progress is being made on the tariff
front, though Trump reiterated that July 9 is still the drop dead date for
making a deal [though this is probably just more of his ‘negotiating tactics’]
(4) and all was quiet on the geopolitical front;
though there is always the Iranians.
https://www.zerohedge.com/geopolitical/un-nuclear-inspectors-depart-tehran-iran-vows-keep-enriching
Bottom line. Short term, I remain in the ‘muddle
through’ camp. Longer term, current fiscal policy remains a major negative,
leaving the overall bottom line (i.e., larger deficits, more national debt) unchanged.
Which means slower growth and higher inflation.
As always, I have to include the caveat that this
is all dependent on Trump not turning everything on its head. So my conviction
level is low on economic growth but much higher on the long term outlook on
inflation.
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 but
anticipating reducing my equity exposure around mid-July or until this latest
run is over whichever comes last.
US
International
The May Japanese leading economic indicators index
was 105.3, in line.
May German industrial production rose 1.2%
versus forecasts of 0%.
May EU retail sales fell 0.7%, in line.
Other
New home affordability declined again in May.
https://politicalcalculations.blogspot.com/2025/07/affordability-of-us-new-homes-worsened.html
Monetary Policy
Duplicity
at the Fed.
https://lawliberty.org/duplicity-at-the-fed/
Fiscal Policy
The
big, beautiful bill is dangerous.
https://www.nytimes.com/2025/07/02/opinion/republican-bill-fed-treasury-secretary.html
Tariffs
The Trump tariffs impact on small businesses.
Investing
The latest from BofA.
News on Stocks in Our Portfolios
What I am reading today
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