9/15/25
The Market
Technical
On
its third try, the S&P made it above its previous all-time high and
remained there. If it closes above that level today (which seems almost
assured), it will confirm the breakout. I opined last week that the index could
be topping---which it apparently hasn’t. Certainly, momentum is on the bulls’
side as the S&P is (1) above all three DMAs and (2) in uptrends
across all timeframes.
In addition, (1) there is lots of cash on the sidelines,
(2) we are half way through the negative September seasonal and approaching the
seasonal Q4 rally and (3) hedge funds have underperformed the Market this year
to date, so they are likely to scramble [read aggressively invest their cash]
to make up for it before year end.
Hedge funds turn buyers.
On the other hand, as I repeatedly note,
valuations are at historic highs. 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 am
adding to my GDX.
The bond market’s reversal on the prior Friday’s
jobs report witnessed good follow through. It reset all three DMAs to support and
blew through the upper boundary of a pennant formation---all of which point to
a dramatic change of direction---at least in the short term. I say that because
TLT remains in downtrends across all timeframes. So a lot of work needs to be
done to alter the longer term price trends.
https://www.zerohedge.com/the-market-ear/3-bond-volatility-crash-charts-matter
Gold continued its rally. It is now above all DMAs
and in uptrends across all timeframes. That is likely to continue as long as
bad news (recession) is good news and the Fed continues to cut rates. Hold on
to your GLD and GDX.
https://www.zerohedge.com/the-market-ear/4000-gold-conviction-buyers-and-forever-bid
Fed cuts fuel gold fire.
https://www.zerohedge.com/the-market-ear/fed-cuts-fed-fear-fuel-gold-fire
The
dollar’s chart remains the ugliest on the block and will likely continue to be
so as long as investors perceive that the economy is weakening and the Fed’s
policy is that of cutting rates. On the other hand, the 50 and 100 DMAs are
providing at least some near term support. Let’s see if they can hold. 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
Seven charts from Goldman.
https://www.zerohedge.com/the-market-ear/seven-charts-goldmans-macro-trading-team-are-watching
Fundamental
Headlines
The
Economy
There was not a lot of US statistical data last
week. What there was, was evenly balanced as were the primary indicators (one
plus, one neutral, one minus). More important, the inflation measures were
positive (one plus, one neutral). Overseas, the data was very upbeat including
the price data (three plus, one neutral).
Overall, the results continued the lack of
trend---weekly data seesawing between positive and negative. That is the very
definition of ‘muddle through’. So, I remain confident in that part of my
forecast.
On the other hand, the inflation numbers were not reflective
of a worsening in trend. Clearly, I need to be open to a revision of my ‘inflation
is as good as it is going to get’ scenario. For the moment, I am just raising a
yellow flag. But additional upbeat inflation reports will persuade me to begin
seriously contemplating altering my forecast.
Overall, there was nothing in last week’s data to
suggest that the Fed won’t cut rates this week. The important question is the
magnitude and frequency of any further policy adjustments. At the moment, the
Fed’s rhetoric suggests more concern about jobs than about prices, so at a
minimum, I have to assume there are more cuts coming. And the longer the price
data remains benign, the more and deeper cuts we can expect.
That would be great news for both the economy and
the Market. But as you may guess, at the moment, I don’t believe that the
inflation numbers will accommodate the Fed or the Market. So, I remain
skeptical of the Fed Funds rate going as low as many believe. But I recognize
that the Fed could make the same mistake as before---tagging any negative
inflationary data as ‘transitory.’
https://www.carsongroup.com/insights/blog/the-fed-is-likely-to-bet-on-transitory-inflation/
That leaves my forecast of ‘inflation as good as
its going to get’ in place and that an aggressive easing of monetary policy
will only increase its likelihood. Indeed, with the onset of tariffs and the
deficits from the BBB, inflation could become an even larger problem than I
previously thought.
Finally, given the very generous valuation level of
equities, I am unwilling to make any long term commitments in the current rally.
US
The September NY Fed manufacturing index was -8.7 versus forecasts of +10.0.
International
The July EU trade balance was +E12.4 billion versus
projections of +E11.5 billion.
August German PPI came in down 0.6% versus
estimates of -0.4%.
Other
The economic week ahead.
ECONOMIC WEEK AHEAD: September 15 - 19
Consumer sentiment falls to four month low.
Overnight News
China said Nvidia violated anti-monopoly laws with
its 2020 acquisition of networking gear maker Mellanox. Nvidia shares fell
premarket (NVDA -2% premkt).
South Korea's top trade envoy, Yeo Han-Koo, is
heading to the United States on Monday for follow-up tariff negotiations, the
trade ministry said, as the countries struggle to overcome obstacles to finalize
a trade deal agreed in July.
Indian trade negotiators are scheduled to visit the
U.S. this week as the two countries try to get their relationship back on track
after weeks of heated rhetoric and 50% tariffs on India. WSJ
Monetary Policy
Brace for typical quarter end liquidity
stress.
Fiscal Policy
The
BLS hallucinated a million jobs.
Inflation
Food at home
inflation.
https://econbrowser.com/archives/2025/09/food-at-home-cpi-accelerating-growth
CPI: the
Fed’s nightmare.
https://wolfstreet.com/2025/09/11/cpi-inflation-dishes-up-another-nasty-surprise-as-it-tends-to-do/
Recession
The
case for no recession.
https://klementoninvesting.substack.com/p/the-us-is-unlikely-to-drop-into-recession
Looking for
signs of a recession.
https://bonddad.blogspot.com/2025/09/august-real-average-wages-and.html
Tariffs
Measuring the impact of tariffs on US
prices.
https://econofact.org/are-tariffs-raising-u-s-retail-prices
Investing
Corporate earnings slowdown signaled by employment
data. The author makes my case for caution though I think his comments on
inflation are a bit confusing.
https://talkmarkets.com/content/corporate-earnings-slowdown-signaled-by-employment-data?post=522380
Bitcoin sees strong demand.
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The dangerous Market outlook. https://www.zerohedge.com/markets/dangerous-market-outlook-cowards-financial-media-cant-say Latest from BofA https://www.zerohedge.com/markets/dangerous-market-outlook-cowards-financial-media-cant-say Latest from Goldman. https://www.zerohedge.com/markets/let-cuts-begin-goldman-warns-be-careful-what-you-wish-2026
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