The Pope Shines A Light On The Fracturing Of America While The Bulls And Bears Put Optimism And Pessimism To The Test: The Action For April 9, 2024
Below this morning’s edition of the Times’s banal descriptions of war and policy differences between Democrats and Republicans is a summary of a profound move by the Catholic Church to set the limits of social emancipation. Elsewhere the Times’ opinion writers note the Pope’s statement on the indignity of gender transition is a limit to liberalism, but this mistaken view underlies the futility of America’s culture wars and their impact on bad policymaking. Gender transition manifests discontentment as the modern basis for emancipation, in place of common sense and economic morality. That transsexuals require scarce technology resources to achieve body contentment puts them at odds with not just the environmental movement but accumulated western and eastern wisdom regarding the infinite potential of the natural body to provide happiness and a window to contentment in a hostile world. The Pope chooses to describe this argument in terms of dignity, but the effect is the same — the ongoing fracture of America at large but of the American Left in particular. In consequence Biden and his ilk try triangulating Republicans by taking on their issues whenever pragmatic, raising deficits and further breeding cynicism. The long-term result if we persist in tolerating such a dynamic is total fracture.
For now the Bulls and Bears are weighing similarly contrary indications and keeping the market in check. The S&P 500 likely consolidates over the near term unless this week’s inflation reports throw a curveball. The bulls have control this morning as several indicators reveal optimism about corporate earnings and the macro environment, but this may well fade by the close. These indicators include:
Liquidity Metrics: Measures of money flow across the globe are trending upwards lately, which helps equities.
Zinc Prices: Few commodities are as broadly important as zinc, and rising prices for zinc signal better than expected global demand, which is usually good for equities.
Aluminum Prices: Aluminium is a critical input for consumer and industrial goods and rising prices signal better than expected global demand, which is usually good for equities.
Copper Prices: Copper makes the energy transition happen but is also a barometer of global growth, and rising prices signal growth may be better than expected.
Tin Prices: Tin is broadly used across goods and industry and rising prices typically signal better growth prospects.
Based on the action yesterday and overnight there are several risks the bulls need to climb over, including:
S&P 500 Technicals: The top 40 in the S&P 500 look set to move the market lower.
Quality Of Earnings Trend: Over the past few quarters the largest firms have generally experienced worsening credit terms, margins and inventories, signaling future profit stagnation or decline.
Short-Term Treasury Rates: Short rates are rising, a portent of higher inflation and/or Fed rate hikes, potentially bearish for equities.
Long-Term Treasury Rates: Long rates are rising and that will reduce the attraction of equities while cooling the housing and auto industries to the detriment of economic growth.
Geopolitical Issues: Developments around Eurasia are a clear negative for equities.
My current positions include 3M (MMM), Pfizer (PFE), a moderate position in UPRO and a smaller position in SPXU, which nets out to a modestly bullish position in equities.