5/13//24
The Market
Technical
Last week, the S&P successfully challenged its
50 DMA (now support) and is now challenging the upper boundary of its short
term uptrend. Clearly, the very short term momentum is to the upside; but that
short term upper boundary could slow things down. If not, the next resistance
is at the all-time high (~5264).
Equities bounce back ending April correction.
Equities
Bounce Back Ending The April Correction - RIA (realinvestmentadvice.com)
What volatility?
https://www.zerohedge.com/the-market-ear/vacuum-bull-0
The long bond was flat on the week, leaving it (1)
below all DMAs (2) in downtrends across all time frames, including a very short
term one that encompasses five lower highs. Too soon to be betting on lower
rates.
GLD has been unusually volatile in the past three
weeks, see sawing up and down and making four sizable gap up/down opens. I
don’t have a lot of directional confidence in gold right now; but if it breaks
to new highs, I will add to my GDX (gold miners ETF) trading position.
Goldman sees higher gold prices.
https://www.zerohedge.com/commodities/most-central-bank-gold-buying-unreported-stunning-new-report-goldman-expects
The dollar was up slightly on the week,
unsuccessfully challenging its 200 DMA (remains support). That leaves it above
the lower boundary of its very short term uptrend as well as its 50, 100 and
200 DMAs. On the other hand, it is in a short term downtrend. It remains out of
step with GLD and TLT and as a result, my puzzlement over its pin action continues.
Friday in the charts.
https://www.zerohedge.com/markets/stocks-end-week-muted-note-stagflation-fears-mount
More charts.
https://www.zerohedge.com/the-market-ear/pain-trades-and-choppy-markets
Fundamental
Headlines
The Economy
Week
in review
Last week’s stats were almost nonexistent (no
primary indicators); but what was, was mixed. So, no new insight on economic growth
or inflation.
The one thing that I will note is that some of the
economists that I respect the most are starting to express concern over a
potential recession (after I just changed my call). The good news is that they agree
that nothing is imminent but worry that several important preconditions are
starting to show up. That is not enough for me to alter my forecast. Indeed, as
long as the employment numbers hold firm, I will stick with the ‘muddle
through’ scenario.
Strong economy. Think again.
https://brownstone.org/articles/strong-economy-think-again/
I continue to believe that inflation is as good as
its going to get absent a more fiscally responsible congress and less compliant
Fed. Clearly, I don’t believe the ‘higher for longer’ storyline the Fed is
trying to sell.
Bottom line:
(1)
as long as the government pursues its current
spend, spend policy, I don’t see us making any further progress in lowering the
inflation rate. Indeed, I don’t think that the Fed has any choice but to
continue monetizing the government IOUs.
(2) the economy seems
to be returning to its pre-covid sluggish growth path---the result primarily of
the ‘crowding out’ effects of irresponsible government spending/financing.
US
International
Other
The Fed
Getting
monetary policy back on track.
https://www.aier.org/article/getting-monetary-policy-back-on-track/
Why rate hikes aren’t off the table. The only
factor not considered in this commentary is the past cowardly performance of
the Fed.
https://www.nytimes.com/2024/05/09/business/economy/federal-reserve-powell-raise-interest-rates.html
Fiscal Policy
To be sure, Bush and Trump tax cuts have been
partially responsible for the fiscal mess we now find ourselves in. What these
authors clearly ignore is the ‘drunken sailor’ spending spree of the congress
(which includes republicans) and Biden administration.
https://www.americanprogress.org/article/permanently-extending-the-trump-tax-cuts-would-cost-4-trillion-over-the-next-decade/
Your
Money at work.
https://www.zerohedge.com/markets/your-tax-dollars-work-75-billion-has-produced-just-7-charging-stations-across-four-states
Recession
Update
on Recession Alert Weekly Economic Indicator.
https://www.advisorperspectives.com/dshort/updates/2024/05/10/recession-weekly-leading-economic-index
The
latest Q2 GDP nowcasts.
https://www.calculatedriskblog.com/2024/05/q2-gdp-tracking-3.html
Goldman’s growing pessimism about the consumer.
https://www.zerohedge.com/markets/goldman-warns-consumers-are-cracking-stagflation-threats-emerge
Bottom line.
In praise of extending bond maturities---but only
if you think inflation has peaked.
https://www.advisorperspectives.com/commentaries/2024/05/10/cost-of-cash-6-trillion-question-pimco
Why liquidity is so important.
The Investment "Holy Grail"
Doesn't Exist - RIA (realinvestmentadvice.com)
News on Stocks in Our Portfolios
What I am reading today
Monday morning humor:
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