The Morning Call
3/2/26
The
Market
Technical
The S&P remains trapped between its 100
DMA and its former all-time high and, just like the prior week, in the face of
lousy news (impending [now real] war with Iran, multiple disasters in the
private credit market). So, the battle between the buyers and sellers continues
with good arguments for follow through in either direction---although we know
Mr. Market hates uncertainty and we now have a boat load of it. Patience.
The Mag 7 just
triggered a sell signal.
On the other hand,
nobody owns the right tail (risk to the upside).
https://www.zerohedge.com/the-market-ear/nobody-owns-right-tail
Extreme shorts.
https://www.zerohedge.com/the-market-ear/extreme-shorts
Everyone is
hedged.
https://www.zerohedge.com/the-market-ear/everyone-hedged-thats-problem
Is
the Market topping?
https://www.zerohedge.com/markets/market-topping-process
The bond market rebounded
from the prior week’s Thursday/Friday sell off. It reset a very short term downtrend
to a trading range---at last showing a little life. But it remains in downtrends
across all major timeframes. My guess is that this rally has less to do with slowing
inflation and more to do with Iran and the growing crisis in the private credit
market and its potential impact on the banks and the public credit market (see
below). If we were to experience another financial crisis, it would undoubtedly
introduce recessionary/disinflationary forces.
CEOs versus the Treasury
,market.
https://www.capitalspectator.com/ceos-vs-the-treasury-market/#more-25331
Gold continued its
recovery, making a third higher high. Clearly, that is encouraging and suggests
that the worst is over. And if the new Iranian war and/or the developing crisis
in the private credit market actually explodes into a full blown financial
crisis, then there is likely way more upside to come. I will re-establish my
GDX trading position on the Market open.
Money managers
buying gold again.
https://www.zerohedge.com/precious-metals/money-managers-are-buying-gold-again
The dollar continued its bounced off the lower boundary of
its intermediate term uptrend and appears to be about to challenge both its 100
DMA as well as the very short term downtrend (green downward sloping line). Also
encouraging is that huge gap down open overhead which needs to be closed. On the
other hand, it is facing opposing forces---the war in Iran should be a positive
while the private credit crisis a negative. Absent resolution of both, my
bottom line remains unchanged. It is still an ugly chart.
Friday in the
charts.
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
The technical
outlook for Ethereum.
https://talkmarkets.com/article/ethereum-price-outlook-after-fg-nexus-sells-7500-eth-1772217062
Bullish trends for
the SPY and GDX.
https://talkmarkets.com/article/bullish-trend-intact-for-spy-and-gdx-1772202639
Fifteen charts
that should make you uneasy.
https://www.zerohedge.com/the-market-ear/15-charts-should-make-you-uneasy
Fundamental
Headlines
The
Economy
It
was an upbeat week for US stats with the primary indicators mixed (one up, two
neutral, two down) and the inflation data also mixed (one plus, one neutral,
one minus). That is supportive of a ‘muddle through’ scenario. My ‘inflation is
as good as it is going to get’ forecast---not so much; although to be fair, the
positive and neutral inflation indicators were specific to the housing market
and the negative datapoint was PPI. The international stats were slightly
negative (again reflective of ‘muddle
through’) while the price points were positive (two plus, one minus).
The
domestic event of the week (if you can call it that) was the state of the union
address which I would characterize and fifteen minutes of relative sound policy
proposals and an hour and thirty minutes of an awards ceremony interspersed
with lengthy periods of grossly misstated economic data and childish pique.
Overseas,
(1) war with Iran is back on the table. has gone live. Given the
outcomes of our recent foreign adventures, one has to be aware of the
unintended consequences. It raises a cautionary signal to both the economy and
the Market and when coupled with (2) a major British private equity firm
announced massive losses. This is the fourth such incident in the last six
months; and clearly raises the risk that we could be facing another global
financial crisis. We are certainly not at that level yet; and hopefully these
are the only ‘cockroaches’. However, were it to occur, it would clearly nix a
‘muddle through’ outlook.
And
more to come.
https://www.zerohedge.com/markets/all-hell-breaks-loose-private-credit
Credit
markets starting to crack.
Credit
rarely moves without a reason.
https://www.zerohedge.com/the-market-ear/credit-rarely-moves-first-without-reason
My
inflation prediction continues to be somewhat uncertain. As I noted last week,
the pundits seem to think that prices are slowly declining. Last week’s PPI
number clearly calls that into question. So, for the moment, I am sticking with
forecast.
From
my favorite optimist.
https://scottgrannis.blogspot.com/2026/02/all-things-considered-outlook-is.html
A
slightly less optimistic take.
https://bonddad.blogspot.com/2026/02/construction-spending-mainly-flat.html
US
International
January German retail sales fell 0.9% versus estimates
of -0.2%.
The February Japanese
final manufacturing PMI came in at 53.0 versus expectations of 52.5; the final
German manufacturing PMI was 50.9 versus 50.7; the final EU manufacturing PMI
was 50.8, in line; the final UK manufacturing PMI was 51.7 versus 52.0.
Other
Chicago PMI at highest level in four years.
Update on GDP nowcast.
https://econbrowser.com/archives/2026/02/alternative-estimates-of-q4-output
A deep dive into the labor market.
The economic week ahead.
ECONOMIC
WEEK AHEAD: March 2 - 6
Inflation
Either commodities are wrong or inflation is
about to matter.
AI
The high hopes for increased productivity.
https://klementoninvesting.substack.com/p/high-hopes
Confusing AI with Fed hikes.
https://www.apolloacademy.com/confusing-ai-with-fed-hikes/
Howard Marks on AI.
https://www.advisorperspectives.com/commentaries/2026/02/27/ai-hurtles
The
Financial System
Credit markets finally crack.
Investing
Stock pickers do
better in a down market.
Ten cheap dividend
growth stocks.
https://www.morningstar.com/stocks/10-cheap-dividend-growth-stocks-buy-2026
Should policy
restrict share buybacks?
https://www.cato.org/blog/should-policy-restrict-share-buybacks
Latest from BofA.
https://www.zerohedge.com/markets/hartnett-private-credit-trigger-market-flush-now-play
The latest from Ed
Yardini.
DEEP
DIVE: The Implications Of The War In The Middle East
News on Stocks in Our Portfolios
What
I am reading today
The
least reliable car brands in 2026.
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