9/2/25
The Market
Technical
The
S&P managed to sneak above its prior high last Thursday, then immediately
sold off on Friday, meaning the uptrend off the April low wasn’t reset. That is
not in and off itself a reason for concern. After all, the index is (1) above all
three DMAs and (2) in uptrends across all timeframes. On the other hand, the
seasonals now are working against equities (see below for an argument against
that position) and, as you know, I am concerned about valuation levels. I
remain of the opinion that 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 but sold my ETH on
Friday.
A closer look at September seasonals.
https://www.advisorperspectives.com/commentaries/2025/08/29/so-long-summer-look-september-seasonals
As you can see, TLT continues to trade around its
50 DMA (and now 100 DMA). In other words, it is going nowhere. That said, it
remains below its 200 DMA (below all three at the close Friday) and in
downtrends across all timeframes. That suggests either doubts among the bond
crowd of the likelihood of a rate cut or a continuing concern about inflation.
The bond vigilantes return.
https://www.zerohedge.com/the-market-ear/rising-yields-rising-fear-bond-vigilantes-return
Gold is giving a break above its quadruple high the
old college try. As always follow through is key at this stage. Favoring a
break is (1) that it remains above its 100 and 200 DMAs and is in uptrends
across all time frames and (2) the inflationary (uncertainty) bias of current
Trump fiscal and monetary policies.
The
dollar just can’t get out of its own way. Clearly, it isn’t terribly excited
about a rate cut, plunging back below its 100 DMA and breaking the very short
term uptrend off its 7/1 low. While there is near in support levels at its 50 DMA
and the lower boundary of its short term trading range, it remains an ugly
chart. 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
Bitcoin cracks.
https://www.zerohedge.com/the-market-ear/wrap-btc-cracks-first-tech-follow
The good, the bad and the boring.
Fundamental
Headlines
The
Economy
The US stats last week were overwhelmingly positive
including the primary indicators (four plus [with one inflation measure], three
neutral [with two price indices]). Exactly the opposite overseas, the data was very
negative including one neutral and one negative inflation reading.
https://bonddad.blogspot.com/2025/08/july-real-income-and-spending-rebound.html
So, once again the numbers were supportive of my ‘muddle
through’ scenario---at least in the US. My ‘inflation is as good as it is going
to get’ forecast---not so much. That is the second week in a row that the price
stats were better than I expected. I am not altering my forecast (yet) but
clearly if this trend continues, I will have to start considering a change.
The problem is in services.
But as I noted last week, if the Fed does begin an
easing cycle, it will, in my opinion, aggravate the price trend in the US; and
it also increases the likelihood that both legs of my outlook will come to
fruition. Short term, I remain in the ‘muddle through’ camp. Longer term, ‘inflation
is as good as it is going to get’ and, indeed, with the onset of tariffs and
the deficits from the BBB, it could become an even larger problem than I
previously thought.
US
International
Q2 Japanese YoY capital spending was up 7.6% versus
consensus of +6.0%; the August manufacturing PMI was 49.7 versus 49.9.
The August German manufacturing PMI came in at 49.8
versus predictions of 49.9; the August EU manufacturing PMI was 50.7 versus
50.5; the August UK manufacturing PMI was 47.0 versus 47.3.
August EU flash CPI was +2.1%, in line; the flash
core CPI was 2.3%, also in line.
Other
This week in the numbers.
ECONOMIC WEEK AHEAD: September 2 - 5
Monetary Policy
Is
the Fed about to stimulate a hot economy?
Is Fed About To Stimulate A Hot Economy?
A rate cut---not so fast.
https://www.morganstanley.com/insights/articles/fed-rate-cut-september-2025-forecast
As the Fed has lowered the short rate, the
long rate has risen.
https://x.com/charliebilello/status/1961424337598140785
Fiscal Policy
Is America better off than it was a year ago? While
all the author says is quite true, I wish he had taken a more balance approach
adding the negatives like the abominable BBB and the serious constitutional
challenges incorporated in Trump tariffs and Fed policies.
https://issuesinsights.com/2025/08/28/are-we-better-off-than-we-were-a-year-ago/
To
my point.
https://www.joshbarro.com/p/trumps-war-on-the-fed-is-pointless
The
US government’s fiscal mess.
The
history of the US government’s investments in private enterprises.
Do
cash transfers fail?
(1) Cash Transfers Fail? - by Arnold Kling - In My
Tribe
Inflation
Is
the rise in electricity prices an early inflation warning?
https://www.capitalspectator.com/is-the-sharp-rise-in-electricity-prices-an-early-inflation-warning/
Higher
prices are coming to household staples.
Tariffs
Appeals court
rules Trump tariffs illegal---but this isn’t the final say.
https://www.zerohedge.com/geopolitical/trumps-global-tariffs-ruled-illegal-washington-appeals-court
White House
response.
Investing
Risk is mispriced.
https://www.apolloacademy.com/remarkable-convergence-of-yields-in-markets/
Hope is not a strategy.
The wisdom of the crowd.
https://chartkidmatt.com/p/the-wisdom-of-crowds-e5f2
Part two.
https://ritholtz.com/2025/08/probability-machine/
The changing nature of bitcoin.
https://www.zerohedge.com/crypto/bitcoin-no-longer-plays-golds-game
Follow the money.
https://www.zerohedge.com/the-market-ear/fab-five-fundamentals-follow-money
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-lucky-numbers
News
on Stocks in Our Portfolios
What I am reading today
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