The Morning Call
10/6/25
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The
Market
Technical
The S&P recovered again, re-establishing
the uptrend off its April low. I added a trend line from the May lows that more
accurately reflects the S&P’s upward rate of momentum. The S&P remains (1)
above all three DMAs and (2) in uptrends across all timeframes. You should
read all the technical links as well as the highlighted Investing links. It is
clear that many Market’s experts believe the near term Market direction is up.
Of course,
there are negatives: (1) the upper boundary of its short term uptrend looms
ever closer and (2) valuations at near historic highs (and getting higher). I
remain of the opinion that this is a market to trade (GDX, ETH, SPRX, IWN) not
invest in long term. If you do, be sure to have close in stops.
The latest from
Goldman’s trading desk.
https://www.zerohedge.com/markets/goldman-trader-creation-vix-1990-has-never-happened
Fab Five
fundamentals.
https://www.zerohedge.com/the-market-ear/fab-five-fundamentals-4
The
bond market continues to be somewhat less than enthusiastic about the prospects
for lower rates. While it remains above all three DMAs (1) they are very
tightly bunched so it would not take much to push TLT below all three and (2) it
is in downtrends across all timeframes. I raised the question two (three) weeks
ago as to whether we were witnessing a major change in direction. I think that
question still stands.
Gold continued its
rally, although the (lack of) recessionary signals and (lack of) inflation data
raises doubts in my mind about its sustainability. In addition, it is very
close to the upper boundary of its short term uptrend, so some backing and
filling would not be a surprise. Still it remains above all DMAs and in
uptrends across all timeframes. So, I will continue to hold my GDX (remember it
is a trade) until there is any sign of a rollover.
The dollar was down last
week though (1) it remained above both its 50 and 100 DMAs and (2) the 50 DMA
has turned up and crossed above the 100 DMA---typically a positive sign. Could
this be the end of the dollar’s decline? As always follow through is the key. Pending
that follow through, 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
Last week’s stats
were slightly tilted to the downside with no primary or inflation data
reported. Overseas, the indicators were overwhelmingly negative with three mixed
inflation numbers (one plus, one neutral, one minus).
So even though we
had two previous weeks of positive numbers, the overall trend continued to be a
see saw pattern. That gives me no reason to alter my ‘muddle through’ forecast.
While there were
no inflation stats, the trend has been towards a lessening in price pressures. So,
I will repeat my conclusion from last week. This is (was) the
third week in a row of positive markers. Another couple of weeks in the upbeat
trend and I will alter my outlook.
The major economic
event of the week was the government shutdown which (1) most economists believe
will be short lived and have little impact on the economy and (2) investors could
apparently care less about.
While apropos of
last week data, my overall bottom line is:
What
is somewaht surprising to me is that growth numbers could be so good at the
same time as the inflation data is improving. Not that in normal circumstances that
would be that unusual. But with the economy seemingly gaining strength at a
time that it is near full capacity while the Fed is easing and the government
is spending like a drunken sailor, it is at least confusing to me.
But
stats are what they are, and I have to respect them. As I noted above, I am on
watch for amending my forecast. Although longer term, I remain skeptical that
current monetary/fiscal policies will not prove inflationary.
US
International
August EU retail sales rose 0.1% versus
estimates of +0.2%.
The September EU
construction PMI was 46.0 versus expectations of 48.7; the September German construction
PMI was 46.2 versus 46.6; the September UK construction PMI was 46.2 versus
45.3.
Other
Economic data reported last week was from non-government
sources.
https://www.capitalspectator.com/gdp-stays-strong-but-job-cuts-and-shutdown-cloud-q4-outlook/
More nongovernment stats.
https://bonddad.blogspot.com/2025/10/alternate-sources-of-employment-data.html
Still more.
https://www.zerohedge.com/markets/who-needs-bls-us-added-60000-jobs-september-best-month-2025
Monetary
Policy
Maybe the Fed shouldn’t be cutting rates.
Update on the Fed’s balance sheet.
Fiscal
Policy
The good news is
that the Trump administration isn’t spending money allocated by congress; the
bad news is that it is likely unconstitutional.
Here is more: there is apparently more than
one constitutional issue involved.
Inflation
An
inflationary resolution to global debt.
The
Financial System
Race
to the financial dung heap.
https://www.zerohedge.com/markets/race-financial-dung-heap
Investing
The three biggest retirement expenses most people
fail to consider.
https://www.usatoday.com/story/money/2025/10/02/retirement-expenses-2026/86341329007/
PIMCO’s current fixed income strategy.
https://www.advisorperspectives.com/commentaries/2025/10/03/tariffs-technology-transition
Update on Q3 S&P earnings.
https://talkmarkets.com/content/us-markets/sp-500-earnings-dashboard-25q3-friday-oct-3?post=526294
Q3 earnings bar set too low.
The AI capex endgame is approaching.
https://www.ft.com/content/c7b9453e-f528-4fc3-9bbd-3dbd369041be
Nation State bitcoin adoption.
https://www.zerohedge.com/crypto/nation-state-bitcoin-adoption-enter-suddenly-phase-soon
Rocket fuel for the crypto market.
https://www.zerohedge.com/crypto/stablecoin-market-boom-300b-rocket-fuel-crypto-rally
The debasement trade.
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-subprime-consumer-credit-cracked
A
bubble in bubble fears.
News on Stocks in Our Portfolios
What
I am reading today
Monday
morning humor.
7
Most Terrifying Consequences Of A Government Shutdown | Babylon Bee
In defense of
luck.
https://www.fourseasons.com/magazine/discover/luck-definition-by-ed-smith/
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