8/18/25
The Market
Technical
The S&P recovered its former high and
re-established the uptrend off its April lows. Higher PPI---fuhgeddaboudit. The
index is (1) above all three DMAs and (2) in uptrends across all timeframes.
This is a market to trade, not invest in long term. If you do, be sure to have close
in stops. I still hold GDX and ETH as trades.
Expect a brief decline following Friday’s
option expiration.
Rich, stretched and crowded.
https://www.zerohedge.com/the-market-ear/market-rich-stretched-and-crowding-fast
The latest form Goldman’s trading desk.
https://www.zerohedge.com/markets/goldman-trader-market-dips-will-be-shallow-bought-short-order
Stocks may not be worried about inflation, but the
long bond still is. TLT is challenging both its 50 and 100 DMAs and will reset
both to resistance if it closes today at the current level or below. Since it
remains below its 200 DMA and in downtrends across all timeframes, if it does
reset its 50 and 100 DMAs, the assumption remains that the longer term trend is
down.
GLD was down on the week, resetting its 50 DMA to resistance.
Though it remains above its 100 and 200 DMAs and is in uptrends across all time
frames, investors seem bothered by the level of uncertainty/confusion/disagreement
I referenced last week. Until it can make a new high, the risk is to the
downside (the GDX chart is much more positive; but clearly it needs GLD to move
higher to confirm its uptrend).
The
dollar sold off last week, leaving its 100 DMA as resistance. While it is not
an encouraging chart, it does have three near in support levels (the 50 DMA,
the lower boundary of a very, very short term uptrend and the lower boundary of
its short term trading range) that could help it construct a double bottom. That
notwithstanding, like GLD, it doesn’t seem to be buying what appears to be the
stock boys’ thesis of a Fed rate cut/lack of concern about inflation. I remain
hard pressed to think that the worst is over.
Friday in the charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
The state of the Markets.
https://bilello.blog/2025/the-state-of-the-markets-august-2025
Fundamental
Headlines
The
Economy
The stats last week were mixed though the primary
indicators were negative (one neutral, two down---and two of those were price
measures). Overseas, the data was negative including four inflations reading
that were neither neutral nor positive.
So, the numbers were basically supportive of (1) my
‘muddle through’ scenario as well as (2) my ‘inflation is as good as it is
going to get’ forecast.
The most surprising development of the week was the
Market’s casual reaction to the very negative PPI number. It clearly suggests
that investors are not that concerned about inflation. I don’t know if that
means that (1) they believe that inflation is ‘transitory’ and, therefore, the
Fed will gear policy to that end or (2) that they are willing to live with
higher inflation as long as the economy grows.
https://mishtalk.com/economics/producer-prices-at-intermediate-stages-suggest-big-inflation-on-deck/
If it is the former, then the problem for me is
that my forecast will be wrong. If it is the latter, the problem is the continuing
debasement of the currency/inflation and all its negative consequences---made
all the worse because Trump uses the Market as a thermometer for judging the
acceptability of his policies: big deficits, higher tariffs, continuing pressure
on any government agency that thwarts or attempts to thwart his agenda. And if
he hammers the Fed to follow suit that means that inflation is likely only
going to get worse. While that may be a plus for the Market short term, one
only has to look at the 1970’s is see what happens to the economy, stock, and
bond prices in the long term.
I opined last week that there appeared to be a “complete
lack of consensus among the experts on what those employment figures from the
prior week and Trump’s tariff policy mean with respect to the strength of the
economy and the direction of inflation.” And that “that it makes me all the more
uncertain about the odds of recession, inflation and the likelihood of my
forecast being correct.”
So while there may be a lack of consensus among the
experts, it appears that the Market may have cast its vote on the outlook for
growth/recession and inflation.
If so, then it aligns with my bottom line. Short
term, I remain in the ‘muddle through’ camp. Longer term, ‘inflation is as good
as it is going to get’ and indeed it could become an even larger problem than I
previously thought unless the Fed refuses to buckle.
US
International
Other
Update on big four recession indicators: retail
sales.
Update on big four recession indicators: industrial
production.
Overnight News
Russia-Ukraine:
US Headlines
- Trump said
they made great progress in the meeting with Russian President Putin
which he said was "a 10" and there are just a few points left
to agree upon and a few things left to resolve, but added there is no
deal until there is a deal and there are one or two significant items
left to agree on and it is ultimately up to NATO and Ukraine to agree.
Trump said they negotiated on NATO, security and land, while he also
stated that he could meet Putin again soon and could see a Moscow meeting
possibly happening, as well as noted that Putin wants to see an end to
the killing like he does.
Russia-Ukraine:
Ukraine Headlines
Ukrainian President Zelensky said Ukraine is ready
for constructive cooperation and will travel to Washington D.C. on Monday,
while he added that Ukraine reaffirms its readiness to work with maximum effort
to achieve peace and the call with US President Trump and Europeans discussed
positive signals and lasted for more than 90 minutes. Furthermore, he
said Ukraine supports President Trump’s proposal for a trilateral meeting
between Ukraine, the US and Russia. It was separately reported that Zelensky
said he emphasised to Trump that pressure on Russia should be stepped up and
noted that security must be guaranteed reliably and in the long term.
Russia-Ukraine:
Russia Headlines
Russian President Putin said he is sincerely
interested in ending the conflict, but all ‘root causes’ must be eliminated and
all Russia’s concerns must be taken into account. Putin said negotiations were
productive and useful. Putin said the personal meeting has been
overdue and was necessary to rectify the situation, while he hopes that a
mutual understanding will bring peace to Ukraine and he agrees with US
President Trump on the need for Ukraine’s security. Furthermore, he said
the agreements should be a starting point and that a Russia-US Investment
partnership has huge potential. It was also reported that Putin told Trump that
if Ukraine fully withdraws from eastern Donetsk and Luhansk regions, Russia
would freeze the front line in the southern regions of Kherson and
Zaporizhzhia. It was also reported that the Kremlin said a trilateral
summit with Ukraine was not discussed yet and there is no date set for another
Trump-Putin meeting.
Russia-Ukraine:
European Headlines
European leaders have been invited to join US
President Trump’s meeting with Ukrainian President Zelensky at the White House
on Monday and it was reported that UK PM Starmer, German Chancellor Merz,
French President Macron, Italian PM Meloni, Finland’s President Stubb, European
Commission President von der Leyen and NATO Secretary General Rutte will join
the Trump-Zelensky meeting on Monday.
Monetary Policy
America
don’t need no stinking independent Fed.
https://www.zerohedge.com/political/stockman-america-dont-need-no-independent-fed
Fiscal Policy
What
is a pocket recission?
https://www.americanprogress.org/article/what-is-a-pocket-rescission/
Lies,
damn lies and statistics, Part 2.
https://www.americanthinker.com/articles/2025/08/lies_damned_lies_and_statistics_at_bls.html
Is Trump’s ‘revenue sharing’ agreement with Nvidia
and AMD legal/constitutional?
Tariffs
Why
tariffs have had a limited impact on inflation---so far.
https://www.wsj.com/economy/trade/trump-tariff-inflation-expectations-83d06efa?mod=economy_lead_pos1
Investing
The latest from BofA.
Next year looks like a wet dream.
https://www.zerohedge.com/the-market-ear/fab-five-fundamentals
Russell earnings revisions breaking
out.
https://www.zerohedge.com/the-market-ear/russel-earnings-revisions-breaking-out-first-time-3-years
How to invest in a stock market bubble.
https://www.ft.com/content/5efd8714-e0cf-4d4b-961f-f3c5b3a4f16d
In a similar vein: What to do when valuations
get scary.
https://www.nytimes.com/2025/08/15/opinion/stock-market-advice-investing.html
What the big boys did in Q2.
https://www.zerohedge.com/markets/heres-what-hedge-funds-bought-and-sold-q2-full-13f-summary
Ethereum biggest macro trade of the year
according to Fundstrat.
https://www.zerohedge.com/crypto/ethereum-biggest-macro-trade-next-10-15-years-fundstrat
News
on Stocks in Our Portfolios
What I am reading today
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