2/3/25
The Market
Technical
Not a promising close to the week. The S&P made
its fourth attempt to get through its all-time high and failed. On the other
hand, it is above all DMAs and in uptrends across all timeframes. This is a
time to sit on your hands and let the Market tell you what it is going to do:
make a new high or start taking out support levels.
Not a market to chase.
https://talkmarkets.com/content/us-markets/not-a-market-to-chase?post=480111
TLT wobbled around last week, closing down. 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.
Tariffs could end the very nascent bond market
party.
https://www.capitalspectator.com/us-bond-market-rebounds-so-far-in-2025/
Gold maintained its upward momentum---helped along
by Trump’s tariff threats. As expected, it challenged its all-time high,
finishing the week above it. If remains there through the close on Wednesday,
it will confirm the break. And as one
pundit pointed, there is nothing above it but a vacuum. My GDX sale looks to have
been premature.
Gold futures and fresh peaks.
https://talkmarkets.com/content/commodities/gold-futures-and-fresh-peaks?post=480112
The dollar was up on the week, though it has been
in a see saw pattern between its 50 and 100 DMAs since early January. The good
news is that it closed back above its 100 DMA, remains above its 200 DMA, is in
short and intermediate term uptrends and has that massive gap down open that
needs to be filled. It seems likely that this pin action is all related to the
uncertainty being created by Trump’s policy blitzkrieg. It will probably stay
that way until there is clarity on that issue.
Friday in the charts.
https://www.zerohedge.com/market-recaps/trump-20-sparks-best-january-gold-decade-bonds-bitcoin-big-tech-bounce-back
Fear is here, but not panic (yet).
https://www.zerohedge.com/the-market-ear/fear-here-panic-not-yet
Vulnerable shorts.
https://www.zerohedge.com/the-market-ear/vulnerable-shorts-0
Fundamental
Headlines
The Economy
The stats last week were slightly upbeat as were
the primary indicators (two up, two neutral, one down). Overseas the data was marginally
more positive. So, stats continue to track a ‘muddle through’ scenario.
Of course, the economic scene continues to be
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 (PCE price
index); and that was better than anticipated. On the other hand, the Donald ended
the week imposing tariffs against Canada, Mexico and China which practically
everyone except Trump and associates agree are inflationary.
https://www.bloomberg.com/news/articles/2025-01-31/trump-barrels-toward-tariff-showdown-with-canada-mexico-china?srnd=homepage-americas
And the response.
https://www.zerohedge.com/markets/trade-wars-begin-trump-slaps-25-tariffs-canada-and-mexico-10-china
The high stakes for global companies.
https://www.nytimes.com/2025/01/31/business/trump-tariffs-china-mexico-canada.html
And they have nowhere to hide.
https://www.nytimes.com/2025/01/31/business/dealbook/trumps-tariffs-colombia.html
However, there are mitigating factors.
https://www.zerohedge.com/markets/all-about-new-trump-tariffs-and-why-hysteria-overblown
Bottom line: there is nothing in the data that
raises a doubt on my the economy ‘muddles through’ and inflation is as good as
it is going to get scenarios.
We
are starting to see late economic cycle characteristics.
https://bonddad.blogspot.com/2025/01/personal-income-and-spending-for.html
Inflation is sticking and the Market is listening.
https://www.zerohedge.com/markets/inflation-sticking-market-listening
US
International
The January Japanese manufacturing PMI came in at
48.7 versus forecasts of 48.8; the January German manufacturing PMI was 45.0
versus 44.2; the January EU manufacturing PMI was 46.6 versus 46.1; the January
UK manufacturing PMI was 48.3 versus 48.2.
The January EU flash CPI was -0.3% versus
expectations of -0.2%.
Other
Details on Q4 GDP.
https://wolfstreet.com/2025/01/30/our-drunken-sailors-partied-massively-in-q4-propped-up-gdp-growth-but-debt-to-gdp-ratio-worsened-to-all-time-worst-121-8/
Initial Q1 nowcast.
https://www.calculatedriskblog.com/2025/01/initial-q1-gdp-tracking-mid-to-high-2.html
Update on big four recession indicators.
https://www.advisorperspectives.com/dshort/updates/2025/01/31/recession-indicators-real-personal-income-december-2024
Overnight News
China is preparing a list of concessions to avoid
an escalation in Trump’s trade war, including purchasing more American goods,
investing more in the US, a commitment to avoid yuan devaluations, curbing
fentanyl precursor exports, and agreeing to treat TikTok as a commercial (not a
national security) issue.
Trump ramped up his tariff threats to the European
Union while saying he would speak with the leaders of Canada and Mexico, as
stock markets sank following a hectic weekend that saw prospects for a trade
war turn into reality. Trump says will "definitely" slap tariffs on
the EU "very soon.”
Trump suggested that the UK might escape punitive
tariffs, although he said Britain was “way out of line” and that he was
considering whether to target its exports.
Mexican President Claudia Sheinbaum will announce
details of her government’s “Plan B” response to tariffs today. Canada’s two
biggest provinces will remove US products from government-run liquor stores.
House Republican leaders want committees to land
deeper spending cuts in their party-line bill to enact President Donald Trump’s
domestic agenda, as they scramble to address a rebellion from key Budget
Committee members who think Speaker Mike Johnson’s initial plan falls short.
Elon Musk said his DOGE team is halting some
Treasury payments to federal contractors as part of aggressive cuts to US
spending. He’s also in the process of shutting down USAID after staff were
denied access to its systems. BBG
Fiscal Policy
On
the likely success of Bessent’s 3-3-3 policy.
https://econbrowser.com/archives/2025/01/bessents-3-3-3-plan-in-the-context-of-2024q4-advance-gdp-release
Under
appreciating fiscal policy.
https://talkmarkets.com/content/us-markets/underappreciating-fiscal-policy?post=480114
The
first casualty of DOGE.
https://www.zerohedge.com/political/treasury-depts-highest-ranking-career-official-rage-quits-after-musks-doge-team-probes
Investing
The latest from BofA.
https://www.zerohedge.com/markets/hartnett-deeppeak
It is
getting late in the cycle.
The Clock Has No Hands - RIA
Trump, the Market and his base.
https://www.zerohedge.com/markets/investors-cant-count-trump-prioritize-rising-market-all-costs
Long
term Bitcoin holders are net sellers.
https://talkmarkets.com/content/bitcoin-hodler-selloff-extends-to-11-million-btc-as-profit-taking-continues?post=480110
Elliott Management warns of crypto bubble.
https://www.ft.com/content/5fe69580-7f01-4215-98bb-b6ec5f7cd833
Is the
Forbes front cover curse a warning?
MARKET CALL: Beware The Front Cover Curse &
Trump Tariffs 2.0
News on Stocks in Our Portfolios
Kroger (NYSE:KR) declares $0.32/share
quarterly dividend, in line with previous.
What I am reading today
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