9/8/25
The Market
Technical
The
S&P tried for a second time to close above its prior all time high and
failed. I said last week that the ‘first failure’ was ‘not in and off itself
a reason for concern.’ However,
while the second time may not be a charm, it is enough to put one on the
alert---that this may be a top, at least for a little while. That said, the
index is (1) above all three DMAs and (2) in uptrends across all timeframes.
So, a lot more damage needs to be done to prompt real concern. Indeed, this may
be nothing more than the negative seasonals kicking in. Still valuations are in
nosebleed territory. 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.
The latest from Goldman’s trading desk.
https://www.zerohedge.com/markets/bond-market-suddenly-more-concerned-about-jobs-inflation
The bond market clearly loved the Friday’s job
reports which cemented a Fed rate cut and perhaps more than one. TLT is now in
the upper range of a pennant formation dating back almost a year and has (1) confirmed
a break above its 50 DMA, (2) will confirm a reset of its 100 DMA if it remains
there through the close today, (3) will confirm a reset of its 200 DMA if it
remains above it through the close on Wednesday and (4) is about to the test
the upper boundary of the aforementioned pennant formation. While this is a one day performance, it does
suggest a wholesale revision in the bond boys playbook---suggesting a major
change in the direction of interest rates. All that said, as always follow
through is the most important thing to watch.
My lead in last week was: ‘Gold
is giving a break above its quadruple high the old college try. As always
follow through is key at this stage.’ And follow though it did, largely reflecting
the same sentiment gripping the bond boys. Certainly encouraging holders of
GLD.
Like
all the above indices, the dollar’s pin action reflected a major shift in investor
perceptions, i.e., that the coming rate cut may be larger than 25 basis points
and/or that there may be more cuts to come. You can see that there is support
at the 50 and 100 DMA’s. Let’s see if they can halt the down move. Even if they
do, it is still 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
https://www.barchart.com/stocks/signals/new-recommendations
Fundamental
Headlines
The
Economy
The US stats last week were quite negative though
the primary indicators were only marginally so (one neutral, one minus). No
inflation numbers. Overseas, the data was fairly balanced with one positive and
one neutral price stat.
Remember in the prior week, the US measures were overwhelmingly
positive; so I am not inclined to read too much into this latest data. That
said, the most important number of the week was the negative primary indicator
which was the nonfarm payrolls report. While this is only one datapoint, it is
one that the Market (and the Fed) were focused on; and hence, one that (the
Market certainly thinks) is likely to be a major determinant of monetary
policy, i.e., substantially increasing not only the likelihood of a rate cut at
the Fed’s September meeting but also (1) the size of the September cut as well
as (2) the number and frequency of subsequent reductions.
https://bonddad.blogspot.com/2025/09/august-jobs-report-recession-watch-as.html
However, I still believe that an aggressive easing
of monetary policy will only increase the likelihood of my ‘inflation is as
good as it is going to get’ forecast. Indeed, as I opined last week, with the
onset of tariffs and the deficits from the BBB, inflation could become an even
larger problem than I previously thought.
US
International
Q2 Japanese GDP growth was +0.5% versus forecasts
of +0.3%; Q2 capital expenditures were up 0.6% versus +1.3#; Q2 private consumption
was +0.4% versus +0.2%.
The July German trade balance was +E14.7 billion
versus predictions of +E21.4 billion; July industrial production rose 1.3%
versus +1.1%.
The August Chinese trade balance was $102.3 billion
versus consensus oof $95.0 billion.
Other
What the yield curve is telling us.
https://evergreengavekal.com/blog/convictions-and-concerns/
Update on the Fed’s balance sheet.
Monetary Policy
Fed
independence doesn’t matter.
Investing
Wall Street’s march into crypto.
Five investing convictions.
https://evergreengavekal.com/blog/convictions-and-concerns/
Is the Market overbought?
https://www.capitalspectator.com/is-the-stock-market-overbought/
The latest from BofA.
The bond market is suddenly more concerned about
jobs than inflation.
https://www.zerohedge.com/markets/bond-market-suddenly-more-concerned-about-jobs-inflation
News
on Stocks in Our Portfolios
What I am reading today
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