Important Quotes/Thoughts of the Day

As I've been pointing out in nearly every video commentary of late, the data, on balance, have indeed improved; lessening the risk of imminent recession... I've also pointed out (charted for viewers), however, the counterintuitive fact that much of the data we measure have historically-tended to see a last-gasp ramp just before the onset of recession... Hmm...

So, while, indeed, such macro improvement has us considering where to adjust allocations to take full advantage of a potentially-improving setup, history says we nevertheless need to -- at the same time -- remain on our toes, at least for the time being.

Correlation Conundrums (Gold, Yields, the Dollar & Stocks), and A 'technically' Extended Equity Market (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Quotes of the Day (or, perhaps, of the next decade)

Goldman hit the headlines last week with their not-so-wonderful 10-year outlook for US stocks:

"Goldman Sachs forecasts that over the next decade the S&P 500 will yield an annualized return of 3%..."

"Indicating a marked slowdown in growth, the 3% return forecast places future returns in the 7th percentile for 10-year returns since 1930."

Which jibes with our John Hussman quote from last week:

Inflation Prospects, Mixed (financial conditions/stress) Signals, Markets, the Overall Setup, etc. (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

What Gives With Gold?, Are We at the Market Tipping Point??, And Overtime Innings (tipping point) or Not, The Game's Still On

Briefly on gold:

Suffice to say that gold resting at all time highs amid rising long-term treasury yields, and, not to mention, a strengthening dollar isn’t what you’d call intuitive.

So, what gives?

Three possibilities come to mind:

Dollar Pattern Playing Out, Rates Surprise (some folks), Powell Got His Way, A Deeper Dive Into the Jobs Setup, Had To Be Tactical With EM, And Maybe We're Not Yet Out of the Woods

Currently testing some new video software, and don't quite have it where we want it just yet... I expect next week we'll be back at it with your end-of-week message delivered via video.

In the meantime, the following consists of a few highlights from our latest internal notes along with commentary I'll add for clarity and context... I'll close with some compelling (BCA) arguments against the growing notion that we're out of the woods just yet:


10/12/2024

The technical setup for the dollar (bullish) that we flagged a couple weeks ago has played out to a T:

Chart of the Day

Here’s one (among a number of) reason(s) why we are long-term bullish on emerging markets (although near-term cautious [on everything]) :

China's Latest, CPI Is (short-term) Key, Investment Mgr Sentiment, and a Slight Rise In Stress

Dear Clients, the following is an important read.

From our internal notes:

10/8/2024

The reopening of Chinese markets, after “Golden Week”, was met with some serious profit taking. Headlines suggest that it's due to a press conference held by the National Development and Reform Commission (NDRC) that did not unveil any details around the fiscal stimulus measures that the market got so euphoric over the past couple of weeks... Thing is, the NDRC would not have offered up such detail, as that’s not necessarily (particularly from an immediate-term perspective) within the purview of that particular entity.

Somewhat (near-term) More Constructive

Delivering this week’s update to you in written form. 

The following is the long and the short of the latest on the economy, and on financial markets.

Our PWA Index (measures overall general conditions) rose markedly for a third straight week -- moving closer to the neutral line -- denoting improved conditions (i.e., recession risk remains elevated, but notably less-so of late):

Pre-Recession Data-Spike??, Rising Liquidity, China and Reflexivity

Highlights from our internal notes:

9/30/2024

Despite the notable improvement in our own macro index, the global liquidity setup (see below), etc. (i.e., recession risk has indeed abated a bit of late), we need to be very cognizant – as I’ve illustrated in recent video commentaries – of the fact that it is the norm to get a positive spike in the data just before recession ensues.

Totem Macro’s Whitney Baker (she’s an exceptional analyst, btw) pointed that out last week, along with the factors that she sees pointing to recession.