“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
“...if Trump continues deporting immigrants at the current rate, inflation will go from 2.5% to somewhere close to 4% “by the time it hits its peak early next year.” Zandi [Mark Zandi, Moody’s chief economist] says his stark prediction is based on recent inflation data. “Foreign-born labor force is declining, and the overall labor force has gone flat since the beginning of the year,” he added. “That’s causing tightening in a lot of markets, adding to costs and inflation.” Story at...
Trump is deporting so many immigrants that it could cause inflation to hit 4% next year, top economist says
My cmt: One of our parishioners is a longtime illegal immigrant. His daughter is here on a medical visa being treated for near blindness. Treatments are only available in the US. He was working for a local hotel, but he was arrested by ICE. He had a deportation hearing recently and the ICE presence was huge at the trial. It makes no sense to me to deport people who are contributing to the economy. Give them a green card instead and make them apply for legal status later. If Zandi is right, Trump’s policies are going to be a disaster for the country. Where do you think the stock market goes if inflation hits 4%?
“Federal Reserve President Austan Goolsbee said Friday a mixed bag of inflation data this week coupled with lingering uncertainty over tariffs have given him some hesitation about lowering interest rates. Previously, Goolsbee has spoken of a “golden path” that would combine moderating inflation and a stable labor market and lead to lower rates. But in a CNBC interview Goolsbee said he still wants to see some more convincing data before the Federal Open Market Committee meets on Sept. 16-17. Goolsbee is one of 12 FOMC voters this year.” Story at...
https://www.cnbc.com/2025/08/15/goolsbee-sees-note-of-unease-as-fed-looks-to-next-interest-rate-move.html
“Something doesn’t make sense about the current stock market boom. U.S. big caps keep soaring while the economic outlook keeps getting worse. Right now, the atmospherics, Big Momentum and AI euphoria, are winning over the negative news flow and daunting market metrics. But sooner or later the fundamentals will take charge, and then, watch out for flying glass...the S&P price-to-earnings multiple just hit 29.85 (6,469 divided by $216.69)—I’ll round it to 30. By historical standards, it’s a gigantic, even scary figure...You never know when gravity will take hold, only that it always does.” Story at...
How investors should be thinking as the stock market nears a P/E ratio of 30—a number that spelled disaster before the dotcom crash
“...the Goldman team is wary, noting that compared with previous periods of low volatility there is a “less friendly” asymmetry to the stock market. “The risk of a large rally is comparably low, as is common in low vol regimes because the largest rallies tend to occur during recoveries, but the equity drawdown probability is elevated and has increased recently,” they say. They point out the S&P 500 has been boosted by valuation expansion, while credit spreads have tightened markedly, suggesting investors may not be adequately pricing in the risk of the economic damage — slower growth and higher inflation — caused by increased tariffs.” Story at...
Goldman researchers warn of an unfriendly asymmetry: Why the next big market move may be down.
“M2 has grown over time, which is natural as GDP grows. Sometimes the Fed and the Treasury department screw it up, though, creating too much or too little money. They did that in a big way, printing a bunch of extra money in 2020 in response to Covid...The Fed has tried to push the toothpaste back into the tube, and raw M2 saw a 5.7% drawdown as of its low point in October 2023. That was the biggest raw decrease in the history of M2, which dates back in official statistics to 1959...now we are seeing a fairly extreme reading for the ratio of the SP500 to M2...It rivals the peak we saw in August 2000, at the peak of the SP500 tied to the Internet Bubble....
... And that is not to say that the ratio absolutely has to come down this time, just because it has always done so before...If the amount of money is not enough to keep prices aloft, then like the dwindling number of chairs in a musical chairs game, it can set off a response by investors who seek to find enough money to keep playing, or to cover their positions when compelled by margin clerks to do so.” – Tom McClellan. Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/sp500_now_really_overvalued_versus_m2/
“In further signs of a soft housing market, the latest HMI survey also revealed that 37% of builders reported cutting prices in August down from 38% in July. This share has remained at 37% or 38% for the past three months. Meanwhile, the average price reduction was 5% in August, the same as it’s been every month since last November. The use of sales incentives was 66% in August, up from 62% in July and the highest percentage in the post-Covid period.” Press release at...
https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index
-Monday the S&P 500 declined about a point to 6449.
-VIX declined about 0.1% to 14.99.
-The yield on the 10-year Treasury rose to 4.335% (compared to about this time prior market day).
None
Today, of the 50-Indicators I track, 5 gave Bear-signs and 16 were Bullish. The rest are neutral. (It is normal to have a lot of neutral indicators since many of the indicators are top or bottom indicators that will signal only at extremes.)
TODAY’S COMMENT
The daily, bull-bear spread of 50-indicators declined from +16 to +11 (11 more Bull indicators than Bear indicators). I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread is rising too – a bullish sign.
I’m cautiously bullish, although my actions suggest I am neutral. My concern: Indicators have been trending down.
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
50% invested in stocks is a normal, conservative position for a retiree. (75% is my max stock allocation when I am confident that markets will continue higher; 30% in stocks is my Bear market position.)
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. When I see bullish signs, I add a lot more stocks to the portfolio, usually by using an S&P 500 ETF as I did back in October 2022 and 2023.
