9/22/25
The Market
Technical
The
S&P re-established its uptrend. Add that to the fact that the S&P is (1)
above all three DMAs and (2) in uptrends across all timeframes---and the
assumption has to be that momentum remains to the upside albeit with a slowing
rate of change.
That said, as I repeatedly note, valuations
are at historic highs (and getting higher). 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.
After being overjoyed by the bond market’s reversal
on the prior Friday’s jobs report, investors were not so receptive to the
results of the FOMC meeting. TLT remains above all three DMAs although it is in
downtrends across all timeframes. I raised the question last week as to whether
we were witnessing a major change in direction. I think that question still
stands.
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://talkmarkets.com/content/commodities/gold-forecast-bullish-trend-intact?post=523672
Another
day, another all-time high.
https://www.zerohedge.com/the-market-ear/gold-another-day-another-athspecs-still-dont-get-it
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. The 50 and 100 DMAs appear to have provided
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.
https://www.zerohedge.com/premium/latest/4
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/sectors/rankings
Seven charts from Goldman.
https://www.zerohedge.com/the-market-ear/seven-charts-goldmans-macro-trading-team-are-watching
Overbought conditions across
multiple markets.
https://www.zerohedge.com/markets/overbought-conditions-across-multiple-markets
Fundamental
Headlines
The
Economy
Last week’s stats were evenly balanced as were the
primary indicators (two plus, two minus). No inflation data. Overseas, the data
was very upbeat including the price data (three plus, one neutral).
Overall, the results continued the weekly data
seesawing between positive and negative---this time upbeat. 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 again
not reflective of a worsening in trend. This is the second week in a row of
positive markers. So as I said last week, 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.
Of course, the big event of the week was the FOMC
meeting and its results---a 25 bp cut which was expected. However, the
narrative from the accompanying statement as well as Powell post meeting
presser read a lot more uncertain than I had expected, especially with respect
to inflation (they are worried). That is actually a plus because it shows
awareness of what I consider to be the primary risk to the economy.
That said, save for Volcker, the Fed (in particular
the Bernanke, Yellen, Powell regimes) has always erred in favor of monetary ease
over fighting inflation. That keeps me concerned about rising prices despite a
couple of weeks of upbeat data.
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.’
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.
US
International
Other
The week ahead.
ECONOMIC WEEK AHEAD: September 22 - 26
Four economists dissect Trump and the
economy.
https://www.nytimes.com/2025/09/18/opinion/fed-rate-cut-miran-cook-powell.html
Monetary Policy
What
country was Powell talking about?
https://committeetounleashprosperity.com/hotlines/what-country-was-jerome-powell-talking-about-2/
Fiscal Policy
How
excessive government debt kills productivity and growth.
https://klementoninvesting.substack.com/p/how-excessive-government-debt-kills
Investing
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All the reasons Trump is wrong about
ditching quarterly earnings reports.
Future rate cuts and the bond market.
https://www.capitalspectator.com/corporates-are-leading-the-bond-market-this-year/ What happens if we get a stock market
reversal?
https://bonddad.blogspot.com/2025/09/the-ai-stock-price-bubble-and-consumer.html The latest from BofA. The latest from Goldman. Retail goes
parabolic.
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What I am reading today
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