The Morning Call
2/14/22
The
Market
Technical
This
S&P chart is a pretty easy read. Last week, it challenged both its 100 DMA
and the upper boundary of that very short term downtrend---and failed---for the
second time in two weeks. That left the 100 DMA as resistance, marked a lower
high and added to the strength of that very short term downtrend’s upper boundary.
Even worse, it is now challenging its 200 DMA (now support; if it remains there
through the close on Wednesday, it will revert to resistance). If downward momentum
holds, then the lower boundary of its short term trading range is the next
support level. All that said, as you know the news flow was schizophrenic last week with wildly varying
news items on Fed policy as well as the ‘supposed’ Russian invasion of Ukraine.
This week will probably be more of the same. So, keep your directional
expectations on hold.
Friday’s strong
performance notwithstanding, the long bond is in a well-defined two month downtrend
and is nearing the lower boundary of its short term trading range. So, we now have near-in directional markers---the
upper boundary of the very short term downtrend and the lower boundary of the
short term trading range. For the moment, the assumption is that prices (rates)
are going lower (higher); but that will be put to the test when, as and if TLT challenges
the lower boundary of that short term trading range.
https://www.zerohedge.com/the-market-ear/mustknows
On
Friday, GLD challenged the upper boundary of the developing pennant formation
on huge volume---the volume suggesting continued momentum to the upside. Still,
I won’t consider the challenge successful until it has remained above that
boundary through the close on Tuesday. However, as I mentioned above, beware of
the volatility of the Fed and geopolitical headlines before making a
directional commitment.
The dollar failed
in the challenges of both the lower boundary of its short term uptrend and its
100 DMA, leaving in an uptrend and the 100 DMA as support. With caveat of
volatile headlines, my assumption remains that irrespective of what happens,
investors continue to believe that the dollar is a safe place to be.
Friday in the
charts.
https://www.zerohedge.com/markets/markets-turmoil-amid-russia-invades-reports-bullard-bombshell
Technically
speaking.
Stocks experiencing
big inflow in 2022.
https://www.zerohedge.com/markets/despite-turmoil-stocks-seeing-largest-ever-inflows-2022
Fundamental
Headlines
The
Economy
Review of last Week
The economic stats
were disappointing in total last week, with one negative primary indicator. So,
no follow through from the prior week’s slightly better than anticipated results.
Overseas, the numbers were again negative.
The one datapoint
that bears mentioning was the hotter than expected CPI number---which only the aggravates
the worries about an ever tighter monetary policy. Not that higher rates and
Quantitative Tightening aren’t needed to correct the gross distortions in the
pricing of risk and the income inequities caused by perpetually low rates and
QE. But, as I have constantly reminded you, it should have been done years ago;
and now a retreat from the extremes of overly expansive monetary policy will
unfortunately impose maximum pain on the economy and the Markets. Of course,
the Fed could always chicken out and retreat; but then it will have inadequately
dealt with inflation who’s its impact on the economy and Markets will worsen. As
I have said, the Fed has painted itself into a corner from which there is no
easy escape.
https://www.zerohedge.com/markets/time-different-feds-next-minsky-moment
The components of
the January CPI number.
https://www.advisorperspectives.com/dshort/updates/2022/02/11/january-inflation-the-components
Focusing on the wrong
variable for the wrong reasons.
The Fed’s dilemma.
https://www.capitalspectator.com/is-recession-the-only-cure-for-inflation/
How transitory is
inflation?
https://ritholtz.com/2022/02/transitory-longer/
The return of
global inflation.
On a more positive
note.
https://www.linkedin.com/in/edward-yardeni/recent-activity/
A Fed tightening is
not a near term threat.
https://scottgrannis.blogspot.com/2022/02/fed-tightening-is-not-near-term-threat.html
And last but not
least, the Fed will hold an unscheduled, closed meeting today.
https://www.zerohedge.com/markets/why-fed-holding-expedited-closed-board-meeting-monday
But then published
its latest POMO schedule which shows continuing QE and no rate hikes before the
March meeting. Confused? So is the Fed.
Which leaves me
with my economic outlook intact ---the economy is struggling to grow, hampered
by irresponsible monetary and fiscal policies, getting no support from the
global economy and threatened by (1) seemingly mounting inflationary forces and
(2) a more severe than anticipated retreat in economic activity.
US
International
Other
Updated Q1 nowcasts.
https://www.calculatedriskblog.com/2022/02/q1-gdp-forecasts-slightly-positive.html
Geopolitical
Ukraine president demands proof of US claims
about Russian invasion.
Bottom
line.
Will a single rate
hike kill the bull market?
https://compoundadvisors.com/2022/will-a-single-rate-hike-kill-the-bull-market
News on Stocks in Our Portfolios
FedEx (NYSE:FDX) declares $0.75/share quarterly dividend, in line with previous.
Illinois Tool Works (NYSE:ITW) declares $1.22/share quarterly dividend, in line with previous.
What
I am reading today
Why
ideology is the enemy of civilization.
The mathematical solution for
settling down.
https://politicalcalculations.blogspot.com/2022/02/the-37-percent-solution.html#.YgaxxN_MKUk
Winners of the ASTRO2021 photo
contest.
https://mymodernmet.com/save-a-star-astro2021-awards/
Quote of the day.
https://cafehayek.com/2022/02/quotation-of-the-day-3798.html?utm_source=feedburner&utm_medium=email
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