The Morning Call---More discussion on DeepSeek

 

The Morning Call

 

1/29/25

 

The Market

         

    Technical

 

            Tuesday in the charts.

            https://www.zerohedge.com/market-recaps/chatccp-chaos-day-2-dead-cat-bounce-or-pain-over

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Weekly mortgage applications declined 2.0% while purchase applications were down 0.4%.

 

The January Richmond Fed manufacturing index came in at -4 versus forecasts of -8.

                          https://www.advisorperspectives.com/dshort/updates/2025/01/28/richmond-fed-manufacturing-activity-soft-january-2025

 

The January consumer confidence index was 104.1 versus predictions of 105.6.

                          https://www.advisorperspectives.com/dshort/updates/2025/01/28/consumer-confidence-falls-further-january-2025

 

                        International

 

The January Japanese consumer confidence index was reported at 35.3 versus forecasts of 36.6; the February German consumer confidence index was -22.4 versus -20.0.

 

                        Other

 

                          Reshoring American industry is possible.

                          https://www.noahpinion.blog/p/yes-reshoring-american-industry-is

 

                          Recession probability drops to 27%.

                          https://politicalcalculations.blogspot.com/2025/01/us-recession-probability-plunges-to-27.html

 

                          Trends in new home versus existing home sales.

  https://wolfstreet.com/2025/01/27/inventory-of-new-completed-single-family-houses-for-sale-spikes-to-highest-since-2007-builders-prop-up-sales-with-lower-prices-bigger-incentives-smaller-houses/

 

                          Delinquency rates for commercial properties increased in Q4 2024.

                          https://www.calculatedriskblog.com/2025/01/mba-delinquency-rates-for-commercial.html

 

            Inflation

 

              Upside risks to inflation.

              https://www.apolloacademy.com/upside-risks-to-inflation/

 

            Tariffs

 

              Trump repeats universal tariff threat.

              https://mishtalk.com/economics/a-great-tariff-experiment-as-trump-repeats-threat-of-universal-tariffs/

 

            DeepSeek

 

              DeepSeek deep-sixes bullish exuberance.

              DeepSeek DeepSinks Bullish Exuberance - RIA

 

              Nassim Taleb on Nvidia’s rout.

              https://www.bloomberg.com/news/articles/2025-01-28/black-swan-s-taleb-warns-nvidia-rout-is-hint-of-what-s-to-come?srnd=homepage-americas

 

              More words of caution.

              https://www.capitalspectator.com/does-china-ai-threaten-us-tech-dominance/

 

              Counterpoint.

              https://talkmarkets.com/content/stocks--equities/should-you-buy-the-nvda-dip?post=479584

 

              Ray Dalio on the AI bubble.

              https://www.ft.com/content/eef8dbc9-bd04-4502-bdc2-1092aa4251b2

 

             Goldman on the DeepSeek disruption.

             https://www.zerohedge.com/markets/ai-correction-versus-market-correction-goldman-macro-strategist-chatccps-impact-fed

 

             Nobody knows anything, DeepSeek edition.

             https://ritholtz.com/2025/01/nobody-knows-anything-deepseek/

             

     Investing

 

            Forget DeepSeek, these are the factors that could bring the Market down.

            https://www.zerohedge.com/markets/forget-deepseek-these-are-factors-could-really-take-rally-down

 

            How important is it?

            https://behaviouralinvestment.com/2025/01/28/right-here-right-now/

 

    News on Stocks in Our Portfolios

 

Automatic Data Processing press release (NASDAQ:ADP): Q2 Non-GAAP EPS of $2.35 beats by $0.05.

Revenue of $5B (+4.8% Y/Y) beats by $40M.

 

 

What I am reading today

 

            The case against birthright citizenship.

            https://www.civitasinstitute.org/research/the-case-against-birthright-citizenship

 

            Can we measure ‘soft power’?

            https://klementoninvesting.substack.com/p/can-we-measure-soft-power

 

                        A potential problem AI could create in the financial system.

            https://www.zerohedge.com/ai/worlds-worst-financial-catastrophe-could-happen-soon

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

 

The Morning Call

 

1/28/25

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/market-recaps/deepseek-sparks-chaos-across-markets-bloodbath-big-tech-bitcoin-black-gold

 

            More selling to come?

            https://talkmarkets.com/content/us-markets/all-time-high-sp-500--is-it-the-selling-opp-i-forecast?post=479395

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

Month to date retail chain store sales grew more rapidly than in the prior week.

 

The November Case Shiller home price index fell 0.1%, in line.

 

December durable goods orders fell 2.2% versus expectations of +0.6%; ex transportation, they were up 0.3% versus +0.4%.

                          https://www.zerohedge.com/markets/us-durable-goods-orders-tumbled-december-boeing-bloodbath-continues

 

December new home sales were up 3.6% versus consensus of -3.5%; December building permits were down 0.7%, in line.

https://bonddad.blogspot.com/2025/01/in-december-theme-for-new-homes-was.html

 

The January Dallas Fed manufacturing index was 14.1 versus projections of 4.0.

https://www.advisorperspectives.com/dshort/updates/2025/01/27/dallas-fed-manufacturing-business-activity-reaches-highest-level-since-october-2021

 

                        International

 

                        Other

 

The impact of undocumented workers on the wages of native born residents.

https://econbrowser.com/archives/2025/01/how-much-does-undocument-immigration-push-down-wages-of-native-born-workers

 

                          More problems for the commercial real estate industry.

  https://wolfstreet.com/2025/01/25/doge-seeks-to-shed-vast-amounts-of-government-office-space-heres-how-much-the-government-leases-and-where-and-what-it-can-shed-during-trumps-term/

 

                          Hotel occupancy rates up 6.7% YoY.

                          https://www.calculatedriskblog.com/2025/01/hotels-occupancy-rate-increased-67-year.html

 

            Overnight News

 

Trump spoke after the Mon close and said “in the very near future” he would be   placing tariffs on computer chips, semiconductors, pharmaceuticals, steel, aluminum, and copper.

 

Trump said he wants universal tariffs much larger than 2.5% and has a tariff level in mind but had not set it yet, which followed an earlier report in FT that Treasury Secretary Bessent is pushing for a gradual 2.5% universal tariffs plan in which the 2.5% levy would move higher by the same amount each month.

 

Trump said he will work with Congress on a plan to secure the borders and that they need a massive increase in funding for border security, while he will work with Congress on tax cuts and must permanently extend tax cuts previously passed under the Trump administration. Trump reiterated "drill baby drill" and said he will give fast approval to anyone building a plant for electric generation. Trump also stated that tariffs will be placed on computer chips in the near future and he will place tariffs on producers of pharmaceuticals, while he added that steel and other industries will be considered for tariffs and tariffs will also be placed on aluminum and copper. Furthermore, he said if you want to stop placing the tariffs, companies need to build plants in the US and it is good that companies in China have come up with a faster method of artificial intelligence whereby Chinese startup DeepSeek should be a wake-up call.

 

            Monetary Policy

 

              Will Trump’s ‘demands’ influence Fed policy?

              https://www.capitalspectator.com/will-the-trump-factor-influence-markets-and-the-fed-this-week/

 

              Update on M2.

 

            Tariffs

 

              Understanding ‘comparative advantage.’

              https://cafehayek.com/2025/01/trump-has-no-comparative-advantage-at-understanding-trade.html

 

            DeepSeek

 

              Nvidia responses to DeepSeek announcement.

              https://www.zerohedge.com/technology/nvidia-openais-sam-altman-respond-deepseek-developments

 

              Goldman on the DeepSeek shock.

              https://www.zerohedge.com/markets/how-goldman-trading-deepseek-shock

 

              More:

              https://www.zerohedge.com/markets/goldman-top-trader-one-fell-swoop-local-narrative-around-ai-has-changed

 

              Bernstein on DeepSeek.

              https://www.zerohedge.com/markets/dont-buy-doomsday-bernsteins-3-reasons-why-todays-market-panic-extremely-overblown

 

              The bulls mount their defense.

              https://www.zerohedge.com/the-market-ear/bulls-mount-their-defense

 

    Investing

 

            Gold glitters.

            https://asiatimes.com/2025/01/gold-glitters-at-end-of-the-world-as-we-know-it/

 

            Curb your enthusiasm. Part 2.

            https://www.downtownjoshbrown.com/p/maybe-the-only-chart-you-need-to-understand-2025

 

            And get ready for higher rates.

            https://www.barrons.com/articles/high-interest-rates-deficit-bonds-borrowing-trump-policies-23a39f5b?st=fH1999

 

            Expect more market volatility.

            https://www.bloomberg.com/opinion/articles/2025-01-27/the-three-forces-shifting-the-investment-landscape?srnd=homepage-americas

           

            Beware of the narrative.

            https://www.optimisticallie.com/p/the-stories-we-tell

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Trading as warfare.

            https://traderfeed.blogspot.com/2025/01/trading-as-warfare.html

 

 

Visit Investing for Survival’s website (http://investingforsurvival.com/home) to learn more about our Investment Strategy, Prices Disciplines and Subscriber Service.

 

 

 

Monday Morning Chartology---The impact of DeepSeek

 

The Morning Call

 

1/27/25

 

 

The Market

         

    Technical

 

The good news is that S&P had a great week. The bad news is that it pushed through its all-time high and then fell back. That doesn’t mean that the rally is over; it just means that we need follow through before getting jiggy.

 

 

 

 

TLT tried and failed to break even a very short term downtrend. So, it remains below all DMAs and in very short term, short term, and intermediate term downtrends. I have said several times over the last weeks that TLT is a market in search of a bottom. That remains the case.

 

 

 

Gold maintained its upward momentum---likely on the back of the continued weakness in the dollar. It looks like we will get a challenge of its all-time high this week. If you traded this rally, I would lighten up on any kind of weakness.

https://www.zerohedge.com/the-market-ear/golds-rally-silvers-lag-euros-bounce-and-vvixs-warning

 

 

 

 

 

 

 

The dollar’s very short term rally ended abruptly, marking a new lower high and trading through its 100 DMA (now support; if it remains there through the close Tuesday, it will reset to resistance). That is the bad news. The good news is that it remains above its 200 DMA, in short and intermediate term uptrends and has that massive gap down open that needs to be filled. I am frankly a bit surprised at its weakness given all the rah, rah American exceptionalism rhetoric coming out of Washington. Kinda reminds me of the rise in long rates after the Fed cut short rates, i.e., maybe that dog won’t hunt.

 

 

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/market-recaps/insider-selling-soars-sp-500-hits-record-high-gold-crypto-jump-dollar-crude-dump

 

    Fundamental

 

       Headlines

 

              The Economy

 

The stats last week were balanced as were the primary indicators (one up, one down). Overseas the data was quite positive, dominated by the upbeat PMI numbers. So, stats continue to track a ‘muddle through’ scenario.

 

Of course, the economic scene was dominated by the political---with Trump issuing multitudinous executive orders as well as press statements on his intended actions, equally divided between what I consider positive and economically incoherent.

 

There was only one inflation number; and that was Japanese CPI which was higher than anticipated. On the other hand, the Donald tempered his tariff threats and the house (for once) made some welcome cost cutting noise. How far that gets is anyone’s guess; but there at least there is hope.

 

 

Bottom line: there is nothing in the data that raises a doubt on my the economy ‘muddles through’ scenario. On the other hand, Trump’s and the house’s rhetoric somewhat confuse the inflation outlook. But until there is something solid to hang my hat on, I am sticking with my opinion that inflation has likely seen its lows.

 

                        US

                       

  The December Chicago Fed national activity index was reported at +.15 versus estimates of +.10.

 

                        International

 

The January German business climate index came in at 85.1 versus expectations of 84.7; the January current conditions index was 86.1 versus 85.4.

                       

                        Other

 

                          A rebound in capital spending.

                          https://dailyshotbrief.com/the-daily-shot-brief-january-24th-2025/

 

                          LA ports December inbound traffic increased dramatically.

                          https://www.calculatedriskblog.com/2025/01/la-ports-inbound-traffic-increased.html

 

                          A deep dive into the recent existing home sales number.

                        https://bonddad.blogspot.com/2025/01/sales-prices-and-inventory-in-existing.html

 

                        Overnight News

 

Nvidia shares tumbled premarket as Chinese startup DeepSeek’s lower-cost AI model — which Marc Andreessen called “AI’s Sputnik moment” — cast doubt on sky-high tech valuations. Nasdaq futures fell more than 4%, putting broader tech stocks on track for a $1 trillion wipeout. ASML dropped more than 10%. DeepSeek’s AI assistant overtook ChatGPT to become the top free app on the US App Store.

 

More details:

https://www.zerohedge.com/technology/chinas-deepseek-bombshell-rocks-trumps-500bn-ai-boondoggle

 

                        And:

https://www.zerohedge.com/the-market-ear/venom-fang-heart-ai-bull

 

                        Deepselling triggers panic.

                        https://www.zerohedge.com/the-market-ear/deepselling-triggers-panic

 

             Fiscal Policy

 

              Politicians who try to circumvent markets eventually lose.

              https://www.capitalspectator.com/trump-says-hell-demand-that-interest-rates-drop-immediately/

             

     Investing

 

                The latest from Goldman’s trading desk.

            https://www.zerohedge.com/markets/politics-positioning-share-earnings-goldman-top-trader-tells-story-week

 

                More.

            https://www.zerohedge.com/markets/winners-win-goldman-trader-says-despite-year-end-wobbles-momo-races-2025

 

                Market returns with new presidents.

            https://quantifiableedges.com/market-returns-with-new-presidents/

 

                The devolution of capital markets.

            https://disciplinefunds.com/2025/01/22/the-devolution-of-public-us-capital-markets/

 

                Time to review your portfolio’s asset allocation.

            https://www.morningstar.com/portfolios/how-far-out-of-whack-are-fund-investors-asset-allocations-800-billion-give-or-take

               

A guide to better portfolio returns in 2025.

            https://www.advisorperspectives.com/commentaries/2025/01/24/gardening-guide-better-portfolio-2025

 

 

                Earnings reports for the Mag 7 dead ahead.

            MARKET CALL: Will DeepSeek Sink The Unsinkable Mag-7?

 

            Confidence is surging; will economic growth follow?

            Inauguration Sends Confidence Surging Higher - RIA

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            The ruling class’s next existential threat.

            https://www.zerohedge.com/geopolitical/davos-un-introduces-ai-next-existential-threat

           

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