The Morning Call
.
12/15/25
The
Market
Technical
Despite the positive reception the Market
gave the FOMC on Wednesday, the S&P closed down slightly on the week. So,
it remained below the lower boundary of the former uptrend off its May low (~6945)
and its former high (~6920). The bad news is that it tested those levels and
failed. The good news is that (1) the failure didn’t prompt any kind of sell off
(2) the seasonal factors are still at work, and (3) that the index is above all
three DMAs and in uptrends across all time frames.
Still, 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.
The rationale
behind market timing.
https://www.priceactionlab.com/Blog/2025/12/market-timing-works/
TLT suffered yet another
dismal week. It had reset its 50 DMA to resistance last week; and now it has reset
both its 100 and 200 DMAs to resistance. In addition, it is in downtrends
across all timeframes. Clearly, investors were not impressed with the rate cut
nor the dovish tone of Powell’s presser narrative. As I said last week, the
only circumstance I can see pushing rates meaningfully lower would be a
recession.
Gold regained its
upward momentum; undoubtedly assisted by the latest Fed easing. It is above all
three DMAs and in uptrends across all timeframes. I continue to hold my trading
position in GDX.
The dollar joined the crowd of Fed skeptics, selling off on
the week and in the process, resetting its 50 DMA to resistance. It remains
within its short term trading range and, optimistically, will continue to do so.
Although I don’t think more rate cuts are the answer for its dismal
performance.
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
US stats last week
were positive with no primary or inflation indicators released. Overseas, the
numbers were balanced as was the inflation data (one plus, one neutral, one
minus).
So nothing here to
alter either my growth (muddle through) or inflation (as good as it is going to
get) forecasts. Another week of upbeat numbers and I will turn off the yellow
flashing light.
Of course, the big
news of the week was the FOMC rate decision---it cut by another 25bp as
expected. But Powell’s narrative at his presser was more dovish than the Market
had expected and we all know the result. As you might guess, I view this as a
negative for future inflation which is apparently shared by the bond and
precious metals markets.
And
it could get worse.
https://www.zerohedge.com/the-market-ear/how-rate-accidents-start
US
The December NY
Fed manufacturing index came in at -3.9 versus
consensus of +11.0.
International
October EU industrial production rose 0.8%
versus projections of +0.3%.
November German PPI was up 0.3% versus
estimates of +0.2%.
Other
Forecasted deceleration in core GDP nowcast.
https://econbrowser.com/archives/2025/12/further-deceleration-in-core-gdp
Hotel occupancy
rate decreased 3.2% YoY.
https://www.calculatedriskblog.com/2025/12/hotels-occupancy-rate-decreased-32-year.html
Monetary
Policy
This is a review
of the possible Fed scenarios in 2026. The only objection I have to the article
is that it states as given that the Fed Funds rate is now above its neutral
level. There is considerable disagreement on that point.
https://www.zerohedge.com/markets/why-fed-will-cut-much-more-expected-2026
Inflation
The 2026 social security shock.
Recession
Three recession indicators looking iffy.
https://bonddad.blogspot.com/2025/12/three-important-fundamentals-based.html
The
Financial System
Bessent accelerates banking deregulation.
https://www.nytimes.com/2025/12/11/us/politics/bessent-regulation.html
AI
States’ Attorneys General warn of potential AI
harm.
2026
Goldman’s forecast.
Investing
The
expected return from stocks over the coming years. This is a point
John Hussman hammers home continuously.
https://www.apolloacademy.com/expected-returns-in-public-equities-over-the-coming-years/
How much crypto
volatility can you handle?
https://www.markovprocesses.com/blog/crypto-in-your-portfolio-how-much-melatonin-do-you-really-need/
S&P 493 ready
for Broadway.
MARKET
CALL: The Impressive S&P 493 Ready For Broadway In 2026
News on Stocks in Our Portfolios
What
I am reading today
Ditching
the SATs was a big mistake.
https://www.zerohedge.com/political/its-official-ditching-sats-was-big-mistake
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