The Morning Call--The bipolar economy

 

The Morning Call

 

1/21/26

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/markets/gold-jumps-crypto-dumps-trump-tensions-tokyo-tumult-spark-global-bond-rout

 

Note: yesterday witnessed a possible pronounced change in Market direction. The S&P fell well below its former all time high and is now challenging its 50 DMA. Here are the nuances: (1) under our time and distance rule, the S&P is still technically in a breakout to the upside---that won’t be reversed until the index stays below that level through the close on Friday, (2) somewhat illogically, if it remains below its 50 DMA through the close today, it will reset it from support to resistance---plus the 100 DMA isn’t that far away [~6744] and (3) to make matters even more baffling, the S&P made a gap down open which technical lore says has to be closed; so even if yesterday’s pin action represented a major change in Market direction, there is a reason for a partial short term bounce.  If this sounds confusing, join the crowd. What it says to me is to do nothing until the technicals clarify the situation.

 

                Tuesday 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

 

            The similarities to the last sell off.

            https://www.zerohedge.com/the-market-ear/deja-vu-how-it-started-last-time

 

            Chart of the week.

            https://www.ft.com/content/91314a3d-2bec-475c-a3c6-f210596102fd

 

            The latest from Goldman’s desk.

            https://www.zerohedge.com/markets/forget-geopolitics-its-all-about-positioning-one-thing-goldmans-trading-desk-looking-today

 

            The latest from Citadel’s desk.

            https://www.zerohedge.com/markets/retail-remains-active-citadels-equity-strategy-head-sees-breadth-real-economy-exposure-key

 

            Bond volatility goes brutal.

            https://www.zerohedge.com/the-market-ear/bond-vol-goes-brutal-biggest-shock-liberation-day

 

            Technical analysis of gold and silver.

            https://talkmarkets.com/content/commodities/gold-and-silver-trouble-brewing-technical-analysis?post=551345

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications were up 14.1% while purchase applications advanced 5.0%.

 

                        International

 

The December UK CPI came in at +0.4% versus consensus of +0.2%; core inflation was +0.3% versus +0.2%; the January industrial trends orders index was -30 versus -28; the Q1 business optimism index was -19 versus -27.

 

                        Other

 

                          Incoming tailwind.

                          https://www.carsongroup.com/insights/blog/incoming-tailwind-tax-cuts/

 

                          The Wall Street Journal survey for 2026 GDP growth.

                          https://econbrowser.com/archives/2026/01/wsj-economic-survey-downside-risk-in-gdp

 

                          The economic consequences of a Trump tariff strikedown.

                          https://econbrowser.com/archives/2026/01/economic-consequences-of-ieepa-tariff-strikedown

 

The bipolar economy (and two reasons that the inflation data will improve).

https://www.advisorperspectives.com/commentaries/2026/01/20/bipolar-economy-part-2

 

            Fiscal Policy

 

              Big government won’t help Trump on ‘affordability’.

              https://www.wsj.com/opinion/free-expression/big-government-wont-help-president-trump-on-affordability-df39198f?mod=free-expression_feat2_null_pos1

 

            Inflation

 

              Energy inflation for households.

              https://wolfstreet.com/2026/01/19/energy-inflation-for-households-electricity-natural-gas-piped-to-the-home-gasoline-and-other-fuels/

 

            AI

 

            AI productivity and (un)employment.

            https://www.advisorperspectives.com/commentaries/2026/01/20/ai-productivity-employment-ubi

 

     Investing

 

            Is a stock market rotation underway?

            https://www.morningstar.com/markets/is-stock-market-rotation-underway-these-sectors-are-outpacing-tech-2026

 

            Treasuries slide amid Japan bond rout and US political uncertainty.

            https://www.bloomberg.com/news/articles/2026-01-20/treasuries-join-global-bond-selloff-as-tariff-fears-grip-markets?srnd=homepage-americas&sref=loFkkPMQ

 

                        What is behind the Japanese bond rout?

https://www.bloomberg.com/news/articles/2026-01-20/sudden-japan-bond-crash-unleashes-turmoil-across-trading-floors?srnd=homepage-americas&sref=loFkkPMQ

 

            Private credit and the expanding role of Business Development Companies.

            https://talkmarkets.com/content/stocks--equities/the-rapid-rise-of-private-credit-and-the-expanding-role-of-bdcs?post=551348

 

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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