6/23/25
The Market
Technical
The S&P continues to struggle to keep its head
above water. It clearly has lost upside momentum. But it is also doing a decent
job of holding near its highs. The key remains
follow through. I am not making any bets but my gut still says that we are in
for a correction of some sort.
From Goldman’s derivative desk.
https://www.zerohedge.com/markets/goldman-derivatives-guru-most-important-chart-markets-right-now
The latest in sentiment and positioning.
https://www.zerohedge.com/the-market-ear/already-bunker-blasted-sentiment-positioning
The long bond continued to struggle to gain any
kind of upward momentum. Indeed, it has failed twice to get above the easiest
resistance level of all---its 50 DMA. It remains in downtrends across all time frames
and below all DMAs which reinforces my guess that the next move in stocks is
down.
GLD continued on its push higher---unusual
when interest rates are rising but also calling into question the longevity of
the recent downtrend in inflation. At the moment, it remains well within a very
short term uptrend and in uptrends across all other time frames as well as
above all DMAs. ……stay with what works.
The dollar finally had a kinda, sorta decent week
and is now pushing up against a very short term downtrend. Another plus (if you
call the aforementioned a plus) is that in the preceding downtrend if made a
slightly higher low, suggesting that it just might have found a bottom. Again
follow through.
The dollar’s death is greatly exaggerated.
https://talkmarkets.com/content/currenciesforex/the-dollars-death-is-greatly-exaggerated?post=504932
Friday in the charts.
https://www.zerohedge.com/market-recaps/dollars-best-week-4-months-bonds-bid-leis-trigger-recession-signal-uncertainty-drops
Friday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/sectors/rankings
Fundamental
Headlines
The
Economy
It was a slow week for economic data. In the US,
the stats were overwhelmingly negative, including the primary indicators (zero
positive, zero neutral, three negative). Nothing on the inflation front.
Overseas, the numbers were roughly balanced as were
the inflation figures (one plus, two neutral one minus). Given the ongoing
erratic results, I don’t read too much into one week’s bad behavior. A couple
more in a row and I will have to start to question my ‘muddle through’ economic
forecast.
The inflation data didn’t extend their three week
positive trend. Although they didn’t present any cognitive dissonance either.
So, I am still assessing the likelihood that inflation may not have seen its
low.
The FOMC meet last week and sounded a bit more
hawkish than last time around, suggesting that its members are still squirrelly
about inflationary pressures----not that I have much confidence in their
opinion anyway.
On the other hand, a number of very smart
economists whom I respect seem to think that the lack of upward bias to
inflation is due to the ‘front running’ of the tariff increases; and that that upward
pressure is about to become manifest. Further as I have made clear numerous
times, I still think that as long as the US government can’t get its fiscal
house in order, the threat of rising inflation is still with us for the long
term.
Bottom line. Short term, the odds of recession, in
my opinion, remain low and it appears that inflation could be moderating. That
said, erratic White House behavior, the Israel/Iran conflict make holding a
firm conviction difficult.
Longer term, current fiscal policy remains a major
negative---as our ruling debates details of the big, beautiful bill while
leaving the overall bottom line (i.e., larger deficits, more national debt) unchanged.
US
International
The June Japanese flash manufacturing PMI came in
at 50.4 versus forecasts of 49.5; the flash services PMI was 51.5, in line; the
flash composite PMI was 51.4 versus 50.7; the June German flash manufacturing PMI
was 49.0, in line; the flash services PMI was 49.4 versus 47.5; the flash
composite PMI was 50.4 versus 49.0; the June EU flash manufacturing PMI was
49.4 versus 49.8; the flash services PMI was 50.0, in line; the flash composite
PMI was 50.2 versus 50.5; the June UK flash manufacturing PMI was 47.7 versus
46.6; the flash services PMI was 51.3, in line; the June flash composite PMI
was 50.7 versus 50.5.
Other
Repealing the laws of economics.
https://www.oaktreecapital.com/insights/memo/more-on-repealing-the-laws-of-economics
Overnight News
When the dust settled on Iran’s nuclear sites on
Sunday after a US bombing raid that President Donald Trump said had “totally
obliterated” its atomic program, one thing was still missing: its highly
enriched uranium, which international authorities haven’t seen for more than a
week.
In retaliation, Iran's parliament has approved
the closure of the Strait of Hormuz after the US launched strikes against the
country’s nuclear facilities. Iran’s security body will make the final
decision on whether to proceed with the plan, state television reported.
Japan scrapped a planned US meeting after
Washington demanded higher defense spending, according to FT sources on Friday.
US Secretary of State Rubio and Defense Secretary Hegseth had been scheduled to
meet Japan’s Defense Minister Nakatani and Foreign Minister Iwaya in Washington
on 1 July. Tokyo cancelled the meeting after the US requested Japan raise its defense
spending target to 3.5%, up from an earlier request of 3%.
Fed's Barkin (2027 voter) on Friday said he sees no
rush to cut interest rates and is not ready to dismiss the inflation risk from
tariffs. He stated that a spike in inflation could not be ignored if it
occurred, noting that price indices remained above target. He added that there
was nothing urgent in the data warranting a rate cut at this point, with the
job market and consumption holding up.
Fed’s Daly (2027 voter) on Friday said things were
balanced and suggested looking more to the fall, rather than July, for a
possible rate cut, in a CNBC interview. She stated that the economy and policy
are currently in a good place, and concerns about tariffs on inflation were not
as large as when they were first announced. Daly noted it was great news that
inflation continued to decline. She said that without tariffs, the Fed would be
considering rate normalization, but they needed to continue monitoring policies
going forward.
Monetary Policy
Moral
hazard.
https://mrzepczynski.blogspot.com/2025/06/the-fed-always-to-rescue.html
Fiscal Policy
More of the same slop from the ruling class sycophants.
Concern over a tax hike from the big, beautiful bill. Why isn’t the author just
as worried about paying for the tax cuts?
https://www.theblaze.com/columns/opinion/a-tax-hike-is-coming-and-its-not-just-for-the-rich
More
nefarious skull drudgery in the big, beautiful bill.
https://www.zerohedge.com/political/big-beautiful-land-grab-technocrats-stand-profit-250-million-acre-bonanza-hidden-hr1
Geopolitics
Don’t forget what happened after the last time a US
president declared Mission Accomplished.
https://www.zerohedge.com/geopolitical/force-posturing-six-b-2-stealth-bombers-en-route-indo-pacific-ahead-trumps-intel
Everyone has the news from this weekend’s US attack
on Iran. I am just going to focus on the consequences, real or potential.
https://www.zerohedge.com/geopolitical/medvedev-reacts-number-countries-now-ready-supply-iran-their-own-nuclear-warheads
And.
https://www.zerohedge.com/commodities/iranian-parliament-backs-strait-hormuz-closure-brent-market-braces-turmoil
Now the Donald is pivoting to regime change: a
bluff or does he really mean it? Whichever, our Founders are rolling over in
their graves.
https://www.zerohedge.com/geopolitical/force-posturing-six-b-2-stealth-bombers-en-route-indo-pacific-ahead-trumps-intel
Investing
New trends in bond ETF investing.
https://www.advisorperspectives.com/commentaries/2025/06/20/5-themes-defining-bond-etf-investing
The case for going global.
https://www.advisorperspectives.com/commentaries/2025/06/20/case-going-global
News on Stocks in Our Portfolios
Accenture (NYSE:ACN) declares $1.48/share quarterly dividend, in line with
previous.
What I am reading today
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