00:00 Josh Lipton
US stocks rally on the second day, with investors focusing on tech’s temporary reprieve from Trump’s tariffs. Jared Blikre from Yahoo Finance joins us with Jared, takeout on trading days.
00:08 Jared Bricle
Thank you, Josh. Stocks were closed in green, but today we had to talk about what happened in technical. It is the cross of death. And I will show you what happened. This is not an S&P 500. In fact, there was one on the Nasdaq a few days ago. It uses the lesser known feature of YFI interactive to generate moving averages. This is 200 days on Josh’s charts from the beginning of the year for the S&P 500. Well, I’m going to put 50 days, and you can see this coming down from a higher space, and we’re crossing it today. So usually, this is a kind of hair bender, hair bender, uh, a more negative side price. And often, for some people, you can see it in the 200-day S&P 500, especially for 200 days. These are not definitions, but here they are rough guidelines. And I have some statistics on how this evolves. So I went back to about 1961. I found 32 instances of these so-called crosses of death. Here are the statistics: one day, one week, one month, one quarter, one year. So it’s actually pretty much green. One day you see a negative .05%, which is a very small loss, but after a week it tends to be higher in two thirds and then about a quarter of 3% after a month. So, what’s going on here, um, stocks tend to go up. So, I have a positive percentage here too, 47 53 50. Those under 70 are not actually bullish. That’s a bit of a problem.
02:58 Josh Lipton
Please continue.
03:00 Jared Bricle
So the bottom line here, um, we’re probably expecting a more negative side price action, but um, not a catastrophe.
03:08 Josh Lipton
So you see the cross of death. It is a sign of the book of revelation. Zombie Apocalypse is here. You stock up on ammunition, beef jerky.
03:18 Jared Bricle
Yes, you can do that. Alternatively, you can see the VIX, which has now reached about 30 levels today. That’s a kind of grace. I was 60 last week. So it tells me that things are getting a little better.
03:29 Josh Lipton
Point number 2. We were able to talk about R-Word, or recession. And I’m going to call Michael Gagun. He is Morgan Stanley’s chief American economist and interviewed him for an episode of stocks and translations that will drop tomorrow on Tuesday. Here’s what he had to say about what he was seeing due to this potential recession:
03:59 Michael Gapen
As you said, the real risk is asset price shock. High-income households are talking about the nearly top 20% of income-earning households, so they sit in the majority of wealth, accounting for 40-50% of total spending. So I think what stands out in the US economy is still the level of asset prices. It’s not leveraged bubble. It’s not an over-investment cycle. So I think the real risk is when noise and uncertainty about trade policy causes stock valuations. That upper income household says, um, maybe we should save a little less and save more?
05:00 Jared Bricle
Okay. So he sees the shock of asset prices. Essentially, it could be a stock market price, a massive drop in stock prices, or real estate. But um, just the decline we already had, um, if you’ve got that 4800 level in your S&P 500, I think we’ve basically talked about the low-cycle thing in this cycle. If you go there, it can in itself lean the economy into a recession, as it is not spent much by wealthy people in itself. So he sees that dynamic.
05:35 Josh Lipton
Do you want to end here with dollars?
05:38 Jared Bricle
ah! We’ve spoken with all the strategists.
05:40 Josh Lipton
Do you know we haven’t seen in a while?
05:42 Jared Bricle
Look at the dollar. We don’t. I haven’t said that for a while. Well, the dollar price action was really interesting so let’s chart this. This is again the S&P 500 and scrolls to the US Dollar Index. But what do you guess? It’s a very similar chart. Well, that was risk-on, especially in the bull market that started in October 2022. So the problem is that when the system has these shocks, many correlations change. Well, I’ll show you a 6-year chart so that I can show you it. This is the lowest price in Dixie. That’s what it’s called. Since then, the US Dollar Index, what is it? 2022. So it’s basically three years. Now I like to trade dollars in the range over a long period of time. Often it will just thrust up or down, then reenter into range. So we went down, and if we do this again, what would we guess if we were higher? It can put all kinds of quibosch in this newborn recovery we have in our assets. So I’m looking at the dollar, figureing out what to do next and looking at that 4800 level again on the S&P 500.
07:05 Josh Lipton
So, and finally, what kind of assets do the assets benefited from this weak greenback call?
07:11 Jared Bricle
Here we show you gold. Therefore, in general, industrial metals also function well, even precious metals, copper. copper. So I’ve lost a bit of money today. Here’s a chart from the three years. You’ll see it. This really took off in early 2024. So, what is gold futures? Um, 3226. I’m not sure. That seems right. So, 3226. It’s much higher. Well, we’ll show you the largest chart so we can go back to the beginning of the century there. And we have seen gold really tears in the wake of the global financial crisis and pandemic, and now, what we are experiencing with tariffs.
08:20 Josh Lipton
Thank you Jared, Buddy. appreciate.
08:22 Jared Bricle
You bet.
