The Morning Call
3/30/26
The
Market
Technical
Another disappointing week, the S&P
logging a fifth lower high and busting through the 23.6% Fibonacci retracement
level. As you can see, there is not much visible support between present levels
and the 38.2% Fibonacci retracement level. The only good news in this chart is Friday’s
small gap down open---though it could easily be filled without disrupting what
is now solid downside momentum. The real issue is, of course, off the chart. And
that is the whim of the Donald. Ordinarily, with this kind of pin action I would
be trading the VIX or the S&P short. But I am scared shitless to do that
because at any minute, he could stop the bombing, declare victory and move on
to Cuba. Doing nothing seems like the thing to do while making my Buy List.
https://www.zerohedge.com/markets/var-shocked-how-much-higher-can-yields-rise-crashing-stocks
Margin debt went down in February.
Brace for more
pain into month end.
The
bond market continued its sell off last week---which is to be expected given
the headlines featured higher oil prices/inflation and potential turmoil in the
financial system and now a more hawkish Fed. TLT is now below all DMAs and in downtrends
across all major time frames. It is only the lower boundary of its very short
term trading range that offers any visible support, which I anticipate will be
challenged shortly---barring some miracle in the Middle East.
Gold made an
attempt to stabilize last week. But it has been too short a time span to have confidence
that it is actually occurring. The bad news is that GLD has reset its 50 and
100 DMAs to resistance. The good news is that it remains in uptrends across all
time frames and has those two gap down opens overhead that need to be filled. I
still own a one half trading position in GDX.
Gold ETFs are
not as important to prices as you might think.
https://www.zerohedge.com/precious-metals/gold-etfs-arent-important-prices-you-might-think
What the crash
in gold prices tell us.
I think it unfortunate that dollar regains some strength on
bad news (war, credit crisis) as opposed to good news (strong economy, lower
inflation). But that is the scenario we got. Like every other index, its
current trend is highly dependent on the length and outcome of the war. Absent
that, the macroeconomic backdrop of the US economy (slow growth and rising
inflation) suggests a lower dollar. Further, I think any capitulation on our
part in the war with Iran (which unfortunately seems a possible if not probable
outcome) would find the dollar sliding again.
That said, UUP has
reset all three DMA’s to support, negated a short term downtrend and established
a very short term uptrend. I expect it to stay this way at least until the cessation
of hostilities.
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 latest from
Goldman’s desk.
Fundamental
Headlines
The
Economy
The
US stats were mixed last week with no inflation data and only one primary
indicator (minus). Overseas, the numbers were upbeat that included one positive
and one neutral inflation reading.
We
still aren’t seeing any economic effects of the Iran war and the turmoil in the
private credit market in the data. With respect to the dramatic rise in oil prices,
it has only been three weeks since the war began; and it takes time for its inflationary
impact to work its way into the system. Frankly, I don’t’ see how we escape the
fallout from the massive destruction of the Mideast oil production
infrastructure. And while we are seeing it real time at the pump, higher oil prices
have yet to work their way into the macroeconomic numbers about which the
pundit class is busy arguing about the size and duration thereof. Clearly, it
will have some effect, but it is way beyond by level of expertise to forecast
it magnitude. Although history can be a useful guide.
The
war is killing housing’s ‘green shoots’.
https://bonddad.blogspot.com/2026/03/trump-take-housing-how-iran-war-is.html
Mortgage
rates at a five month high.
The
private credit problem just keeps getting worse. Before attempting to judge the
impact of the present circumstance, we need the answer to two questions: (1)
how many of the private sector loans are trash and (2) how large is the
exposure of the banking and insurance industries. Of course, no one has any
idea concerning the answers to those questions. But that hasn’t stopped the ‘experts’
from opining; and there is no consensus among that group.
A
bright spot.
The difference between the current private credit crisis and the GFC.
https://www.zerohedge.com/markets/subprime-crisis-20-will-private-credit-be-trigger
We
know how the economy responses to war (Vietnam, Iraq, Afghanistan, Ukraine) and
despite some initial hiccups, all was well. We also know how it responds to
turmoil in the financial system (S&L debacle, GFC)---and it ain’t great. Although
the above article offers some hope that while we still have a problem it may
fall short of those two recent experiences.
All
that said, I am reinstating my ‘inflation is as good as its going to get’
scenario; but I am holding off on the ‘muddle through’ forecast until there is some
clarity on the economic consequences of the war and the stink inside the
private credit market.
Economic
policy uncertainty.
https://econbrowser.com/archives/2026/03/the-year-and-2-months-of-living-dangerously
The Fed has run out of road.
I'm
Sorry, But The Fed Has Run Out Of Road
US
International
The March EU
economic sentiment index was 96.6 versus forecasts of 96.8; the industrial sentiment
index was -16.3, in line; the services sentiment index was -7.0 versus -8.0;
the consumer confidence index was -16.3, in line.
March German CPI came in at 1.1%, in line.
Other
The economic week ahead.
ECONOMIC
WEEK AHEAD: March 30-April 3
Iran
Overnight news.
Fiscal
Policy
Bipartisan call for a 3% deficit target.
https://thehill.com/opinion/congress-blog/economy-budget/5799552-bipartisan-fiscal-forum-target/
Is the national debt becoming crisis?
Investing
The latest from Goldman.
https://www.zerohedge.com/markets/3-streaks-worth-flagging-something-weekend-goldman-sachs-partner
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-our-sell-signal-ends-and-policy-panic-begins
The latest from Citadel.
Higher for longer
oil prices.
MARKET
CALL: Stock P/Es Discounting Higher-For-Longer Oil Prices & Interest Rates
News on Stocks in Our Portfolios
What
I am reading today
Quote
of the day.
https://cafehayek.com/2026/03/quotation-of-the-day-5328.html
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