The Morning Call---The level of uncertainty is rising

 

The Morning Call

 

2/25/25

 

The Market

         

    Technical

 

            Monday in the charts.

            https://www.zerohedge.com/market-recaps/no-panic-discomfort-high-bonds-bullion-bid-momo-meme-stock-meltdown-continues

 

            Another bitcoin rally fails.

            https://talkmarkets.com/content/bitcoin-price-breakout-dreams-crushed-again-whats-next?post=483867

 

            Crypto crashing.

            https://www.zerohedge.com/the-market-ear/crypto-crashing

 

            Volatility playbook.

            https://talkmarkets.com/content/us-markets/volatility-playbook-key-levels-and-market-catalysts-to-watch-now?post=483852

 

            Stagflation vibe getting legs.

            https://www.zerohedge.com/markets/friday-saw-huge-buying-crash-puts-nomura-notes-stagflation-vibe-taking-hold

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The February Dallas Fed manufacturing index reading was -8.3 versus consensus of +18.0.

 

                        International

 

                          Q4 German GDP growth was -0.2%, in line.

 

                        Other

 

                          Monday in the economic charts.

                          https://www.advisorperspectives.com/commentaries/2025/02/24/thoughts-revenue

 

                          Top 10% income bracket accounts for 50% of all spending.

                          https://mishtalk.com/economics/top-ten-percent-account-for-half-of-all-spending-up-from-36-percent/

 

            Overnight News

 

Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under Joe Biden to limit Beijing’s technological prowess.

 

President Donald Trump’s Federal Trade Commission will “vigorously” sue to block illegal mergers, the agency’s new chairman said Monday, highlighting support for the repeated deal challenges during the Biden era.

 

President Donald Trump said on Monday that tariffs on Canadian and Mexican imports are "on time and on schedule" despite efforts by the countries to beef up border security and halt the flow of fentanyl into the U.S. ahead of a March 4 deadline.

 

French President Emmanuel Macron said a truce in Ukraine could come in “weeks” after meeting with Trump at the White House but added that a deal “must not mean a surrender of Ukraine.”

 

Fed's Goolsbee (2025 voter) said if the administration enacts policies that drive up prices, the Fed has to take them into account by law, while he added that auto parts suppliers have expressed concerns about tariffs and before the Fed can go back to cutting rates, it needs more clarity. Furthermore, Goolsbee said the full details of the administration’s policy package are still to be determined and they have to take a wait-and-see posture.

 

            Fiscal Policy

 

              John Mauldin on increasing federal revenues.

              https://www.advisorperspectives.com/commentaries/2025/02/24/thoughts-revenue

 

            Inflation

 

              Declining confidence in controlling inflation.

              https://econbrowser.com/archives/2025/02/fed-inflation-credibility-index-under-trump

 

            Recession

 

              Employment weaker than thought.

              https://bonddad.blogspot.com/2025/02/q3-2024-qcew-suggests-employment-was.html

 

            China

 

              US China decoupling.

              https://www.zerohedge.com/markets/trumps-big-salvo-toward-us-china-decoupling

 

     Investing

 

            Update on the yield curve.

https://wolfstreet.com/2025/02/22/treasury-yield-curve-flattens-as-10-year-yield-falls-while-short-term-yields-stay-put-feds-pivot-to-wait-and-see-in-inflationary-times-but-mortgage-rates-stay-near-7/

 

The probabilities for errors are rising (I like Barry Ritholtz approach to investing. And I agree with much of this analysis. But keep in mind in reading this that his political leanings are left of center).

https://ritholtz.com/2025/02/probabilities-errors-rising/

 

            The level of uncertainty is rising.

            https://www.zerohedge.com/markets/all-roads-lead-mar-lago

 

    News on Stocks in Our Portfolios

 

 

What I am reading today

 

            Warren Buffett’s latest letter to shareholders.

            https://www.berkshirehathaway.com/letters/2024ltr.pdf

 

 

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Monday Morning Chartology

 

The Morning Call

 

2/24/25

 

 

The Market

         

    Technical

 

The S&P took a shellacking on Thursday and Friday to finish the week well off its highs. While it remains above all DMAs and in uptrends across all timeframes, it (1) failed to hold its all-time high for the sixth time in the last two months and (2) is about to challenge its 50 DMA [~6007]. At the moment, follow though is key. But if it fails to the downside, important near in support exists at (1) the lower boundary of its very short term uptrend [~5975] and (2) its 100 DMA [~5941].

 

Markets rolling over.

https://www.zerohedge.com/the-market-ear/markets-rolling-over

 

More from JP Morgan.

https://www.zerohedge.com/markets/momentum-rout-extends-second-day-jpmorgan-warns-more-come

 

 

 

 

 

TLT appears to be making an equally dramatic turn in its technicals. It finished (1) Thursday above its 50 DMA, reset it on Friday from resistance to support and (2) Friday above the upper boundary of its very short term downtrend; if it remains there through the close today, it will reset to a trading range. While it remains below its 100 and 200 DMAs and in short term, and intermediate term downtrends, there is a decent probability that it has marked that bottom that I have opined that it has been in search of.

 

Note: the inset at the bottom of the chart is its relative strength indicator (RSI).

 

 

 

 

GLD had another great week. But as you can see in the RSI block at the bottom, it is getting really stretched to the upside on a short term basis. Somewhat confusingly, neither the gold miners (GDX) nor silver (SLV) have participated in gold’s upside momentum.  So, any consolidation in GLD could present any opportunity to leg into GDX or SLV or both.

 

 

 

The dollar continued its downward path (1) resetting its 100 DMA to resistance from support and (2) commencing a challenge of its 200 DMA (now support). The good news (which is shrinking on a daily basis) is that it remains in short and intermediate term uptrends and has that massive gap down open that needs to be filled.

 

 

 

            Friday in the charts.

            https://www.zerohedge.com/market-recaps/momo-massacre-continues-retail-traders-retreat-gold-bid-8th-straight-week

 

The latest from Goldman’s trading desk.

https://www.zerohedge.com/markets/goldman-traders-hit-panic-button-perfect-storm-amid-positioning-valuation-breadth

 

            The latest observations on volatility.

            https://www.zerohedge.com/the-market-ear/latest-observations-volatility-markets

 

            The oil market seems to be tuning Trump out.

            https://www.axios.com/2025/02/21/oil-markets-trump-stable-price

 

    Fundamental

 

       Headlines

 

              The Economy

 

The stats last week were overwhelmingly negative as were the primary indicators (one neutral, three down). In addition, there are some anecdotal warnings that point potentially at a slowdown/recession---(1) federal employee layoffs, (2) tariffs and (3) budget cuts which while positive/necessary in the long run will have a negative impact on economic growth short term. These factors at best suggest a very weak ‘muddle through’ economy and, at worst, a recession. Since this is the third week in a row of poor economic data, I am turning on the warning light. That is not a change in forecast, but it is a signal that one could be coming.

The Tariff Risk Isn't In Inflation (Part II) - RIA

 

 

No data on the inflation front. So that part of my forecast (inflation as good as it is going to get) remains solid.

 

 

Overshadowing all of this is the Trump revolution which keeps the level of uncertainty extremely high---adding to my lack of my confidence in my forecast.

 

Overseas, the numbers were very, very positive including the price data.  So, that is something of an offset to the concerning US stats.  It is also supportive of many of the Street recommendations to add to the international portion of your portfolio.

                       

                          Update on Q1 GDP nowcast.

                          https://www.calculatedriskblog.com/2025/02/q1-gdp-tracking-around-2.html

 

Consumer growth expectations crash, inflation expectations soar (stagflation?).

                          https://econbrowser.com/archives/2025/02/consumer-expectations-crash-1-year-ahead-inflation-expectations-soar-as-5-year-ahead-hits-record

 

                        US

 

The January Chicago Fed national activity index came in at -0.3 versus estimates of +0.21.

 

                        International

 

                          January EU CPI was -0.3%, in line.

 

The February German business climate index was 85.2 versus expectations of 85.8; the February current conditions index was 85.0 versus 86.5.

 

            Fiscal Policy

 

              Student loan forgiveness blocked.

              https://mishtalk.com/economics/student-loan-borrowers-crushed-by-appeals-court-ruling-credit-scores-plunge/

 

            Recession

 

              Is employment about to start deteriorating?

              https://angrybearblog.com/2025/02/jobless-claims-possibly-the-final-steady-as-she-goes-report

 

              But so far, consumer credit is in great shape.

              https://talkmarkets.com/content/us-markets/credit-delinquencies-below-recession-levels?post=483520

 

              Increasing odds of recession in 2025.

              No Recession until 2025Q4 (Assuming Reciprocal Tariffs w/Retaliation) [graph corrected!] | Econbrowser

 

            Overnight News

 

     Investing

 

                Margin balances suggest risk is building.

            Margin Balances Suggests Risks Are Building - RIA

 

                Did the AI bubble just burst?

            https://www.zerohedge.com/markets/channel-checks-indicate-data-center-cancellations-report-bursts-ai-bubble

 

Luck versus skill in investing.

            https://blogs.cfainstitute.org/investor/2025/02/21/luck-vs-skill-great-investment-leaders-know-the-difference/

 

                Tune out the noise.

            https://ritholtz.com/2025/02/tune-out-the-noise/

 

                Solving the income investor’s dilemma.

            https://www.advisorperspectives.com/commentaries/2025/02/21/solving-income-investor-dilemma

 

                TIPS are a bargain.

            https://www.capitalspectator.com/real-inflation-adjusted-treasury-yields-remain-elevated/

 

                Do bitcoin ETFs belong in your portfolio?

            https://talkmarkets.com/content/commodities/do-crypto-etfs-belong-in-your-portfolio?post=483516

 

                Bitcoin, Ether tumble on news of giant hack.

            https://www.zerohedge.com/crypto/bybit-exchange-hacked-over-14-billion-steth-moved

 

    News on Stocks in Our Portfolios

 

What I am reading today

 

            Quote of the day.

            https://cafehayek.com/2025/02/quotation-of-the-day-4927.html

           

Letters of marque and reprisal.

            Let's Go Privateering! - by Glenn Harlan Reynolds

 

           

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The Morning Call--7 reasons stocks will trade down

 

The Morning Call

 

2/21/25

 

The Market

         

    Technical

 

            Thursday in the charts.

            https://www.zerohedge.com/market-recaps/dollar-stocks-dumped-bitcoin-pumped-gold-stumped-lei-hits-9-year-lows

 

            7 reasons why stocks will trade down.

            https://www.zerohedge.com/the-market-ear/goldmans-7-reasons-why-stocks-will-trade-down

 

            The latest from Goldman’s flows guru.

            https://www.zerohedge.com/markets/27-trillion-opex-looms-goldman-flows-guru-says-im-correction-watch

 

            Favorite retail momentum names are crashing.

            https://www.zerohedge.com/markets/retail-favorite-momentum-names-are-crashing-heres-one-reason-why

 

            Puts to buy for a pullback.

            https://www.zerohedge.com/markets/puts-buy-pullback-goldman

 

            More from Goldman and JP Morgan.

            https://www.zerohedge.com/markets/momentum-massacre-post-mortem-todays-retail-puke-goldman-jpm

 

    Fundamental

 

       Headlines

 

              The Economy

 

                        US

 

The January leading economic indicators fell 0.3% versus forecasts of -0.1%.

 

                        International

 

January Japanese CPI was +0.5% versus projections of +0.2%; the February flash manufacturing PMI was 48.9 versus 49.0; the flash services PMI was 53.1 versus 52.2; the flash composite PMI was 51.6 versus 51.5.

 

January UK retail sales grew 1.7% versus consensus of +0.3%; ex fuel, they were up 2.1% versus +0.9%; the February consumer confidence index was -20 versus -22; the February flash manufacturing PMI was 46.4 versus 48.4; the flash services PMI was 51.1 versus 50.8; the flash composite PMI was 50.5, in line.

 

The February German flash manufacturing PMI was 46.1 versus expectations of 45.5; the flash services PMI was 52.2 versus 52.5; the flash composite PMI was 51.0 versus 50.8; the February EU flash manufacturing PMI was 47.3 versus 47.0; the flash services PMI was 52.2 versus 52.5; the flash composite PMI was 50.2 versus 50.5.

 

                        Other

           

                          How world trade has changed.

                          https://mrzepczynski.blogspot.com/2025/02/how-world-trade-has-changed-real-issue.html

           

                          Thursday in the economic charts.

                          https://dailyshotbrief.com/the-daily-shot-brief-february-20th-2025/

 

                          January inbound traffic at LA ports at record levels.

                          https://www.calculatedriskblog.com/2025/02/la-ports-record-inbound-traffic-in.html

 

                          January architecture billings remain soft.

                          https://www.calculatedriskblog.com/2025/02/aia-architecture-billings-billings.html

 

            Overnight News

 

The US and EU have discussed a potential deal to cut and ultimately scrap tariffs on car imports. EU officials insisted there was “positive momentum: towards a compromise between the two sides following talks in Washington this week.

 

            Recession

 

              Growing distress in the commercial real estate market.

              https://www.zerohedge.com/markets/subprime-redux-commercial-real-estate-bond-distress-hits-another-record-high

 

 

            Fiscal Policy

 

              Trump terminates all federal benefits going to illegal aliens.

              https://www.zerohedge.com/political/trump-signs-executive-order-terminating-all-federal-taxpayer-benefits-going-illegal

 

    Investing

 

            As go earnings, so goes stocks.

            https://investorplace.com/hypergrowthinvesting/2025/02/strong-earnings-should-keep-stocks-on-a-winning-path/

 

            Update on outlook for dividends.

            https://politicalcalculations.blogspot.com/2025/02/the-outlook-for-s-500-dividends-in.html

 

            The bond market: stable but on alert.

            https://www.capitalspectator.com/despite-inflation-risk-bond-market-holds-on-to-gains-in-2025/

 

            The Treasury has a demand problem.

            https://www.zerohedge.com/markets/treasuries-demand-loss-golds-gain

 

            Desperation in the global gold market.

            https://talkmarkets.com/content/commodities/desperation-in-the-global-gold-market?post=483279

 

    News on Stocks in Our Portfolios

 

 

 

What I am reading today

 

           

 

 

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