7/21/25
The Market
Technical
The S&P closed up on the week. In the process,
it briefly traded below the lower boundary of the uptrend off its 4/7 low but
recovered. It remains above all three DMAs and in uptrends across all
timeframes. For the moment, all systems are go …. barring another s**t bomb
from the Donald, we are likely to have smooth sailing over the near term. Given
valuation levels, I am not making any new equity investments though
traders might want to participate.
A boring week ahead?
https://www.zerohedge.com/economics/can-we-just-skip-next-week
The bond guys continue to be under impressed with
the economic outlook---likely the result of the turmoil from the Trump tariffs,
the potential for Powell’s firing and the BBB. The good news I suppose is that TLT
is holding above the lower boundaries of its very short term trading range and
its intermediate term downtrend. However, given that it is in downtrends across
all time frames, below all DMAs and facing increased inflation from the BBB, the
assumption has to be that there is more downside.
GLD was essentially unchanged on the week but
remained above its 50 DMA. It is now above all DMAs and in uptrends across all
timeframes. The inflationary implications of the BBB should keep it on an
upward trajectory. I continue to hold trading positions in GDX and ETH.
The dollar maintained (just barely) its upward
momentum. Plus, it is holding (just barely) above its 50 DMA. I would like to
see a bit stronger move to the upside before I entertain any hope that the
worst is over.
China’s economic demise and the dollar.
Friday in the charts.
More charts to consider.
https://www.zerohedge.com/the-market-ear/king-bros-netting-close-10bn-btc
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
Fundamental
Headlines
The
Economy
The stats last week were somewhat sparce. However,
they were quite positive, including the primary indicators (four plus
[including one inflation index], two neutral [including one inflation index],
two minus). Overseas, data was mixed; but the inflation markers were awful (two
neutral, two negative).
Clearly the numbers were (1) supportive of my ‘muddle
through’ scenario but (2) not so much for my ‘inflation is as good as it is
going to get’ forecast---and that is the second week in a row of upbeat price
action.
Economists outlook improves.
On the policy front:
(1) Trump seemed to be backing away from his drive
to fire Powell---which is a plus more for the Market than the economy.
(2) tariff policy remains as confusing as ever.
Bottom line. Short term, I remain in the ‘muddle
through’ camp. Longer term, current fiscal policy continues to be a major
negative, leaving the overall bottom line (i.e., larger deficits, more national
debt) unchanged. Which means slower growth and higher inflation.
As always, I have to include the caveat that
this is all dependent on Trump not turning everything on its head. So my
conviction level is low on economic growth but much higher on the long term
outlook on inflation.
That said, stocks love to climb the
proverbial ‘wall of worry.’ Plus July is
historically a good month for stock prices. That leaves me on the sidelines but
anticipating reducing my equity exposure around mid-July or until this latest
run is over whichever comes last.
US
International
Other
A deep dive into
the latest retail sales number.
https://wolfstreet.com/2025/07/17/my-thoughts-about-those-june-retail-sales/
Big four recession indicators,
https://www.advisorperspectives.com/dshort/updates/2025/07/17/the-big-four-recession-indicators
The latest Q2 nowcast looks good, but the next two
quarters may be a problem.
https://www.capitalspectator.com/moderate-rebound-still-expected-for-us-economy-in-q2-gdp-data/
Overnight News
US Commerce Secretary Lutnick said he is confident
they will get a deal done with the EU, while Lutnick said that President Trump
is ‘absolutely’ going to renegotiate the USMCA.
EU envoys are set to meet as early as this week to formalize
a retaliation plan in the event of a possible no-deal scenario with US
President Trump, according to Bloomberg.
Japanese PM Ishiba said he will tackle US tariff
issues before the August 1st deadline and they cannot give up the negotiation
bases they’ve built through US tariff talks, while he added that tariff
negotiator Akazawa is to visit the US on Monday.
Japanese tariff negotiator Akazawa said he will
visit the US this week and they are making arrangements for ministerial-level
tariffs talks with the US to take place this week, while he also noted that he
did not discuss tariffs with US Treasury Secretary Bessent on Saturday.
South Korea's Industry Ministry said US tariff
negotiations are in a serious situation and it pledged an all-out effort to
smoothly wrap up US tariff talks.
Tariffs
Making
a dumb trade war even dumber.
Investing
Signs that say it’s time to sell.
https://www.advisorperspectives.com/commentaries/2025/07/17/signs-scream-time-to-sell
Latest from BofA: Sell signal triggered.
https://www.zerohedge.com/markets/hartnett-our-sell-signals-have-been-triggered
More from BofA.
https://www.zerohedge.com/markets/hartnett-best-way-tell-if-we-are-another-stock-bubble
Goldman thinks not quite yet.
Market Ear agrees.
https://www.zerohedge.com/the-market-ear/im-not-inclined-pick-big-fight-either-those
A more optimistic note from Ed Yardini.
And from Dan Niles.
https://www.zerohedge.com/the-market-ear/dont-shut-dan-niles
News on Stocks in Our Portfolios
What I am reading today
How do AI Chatbots work?
https://politicalcalculations.blogspot.com/2025/07/how-do-ai-chatbots-work.html
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