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Federal Tax Data Hints at Economic Slowing

Tax collections fell in June as the Trump Tax Cut continued to bite into federal revenues. The fall in tax collections combined with the rise in spending stemming from Congressional Budget Busting Agreement signed by Trump, is causing an increase in Treasury supply. Meanwhile increased debt-financed deficits have kept the US economy running hot, but there are hints of slowing…

Here’s Why It’s Important That Stocks and Bonds Rallied Despite Tightening Liquidity

Monthly deficits have exploded since passage of the tax cut and Congressional Budget Busting Agreement. However, June was a tax collection month, padding the Treasury’s cash account. That allowed the Treasury to pay down a few T-bills in June. But there was still a big year to year increase in supply. Despite that, stocks and bonds both rallied. Here’s what…

Tax Collections Remain Weak Except At the Top – Why That’s Bad News

Federal tax revenue has cratered thanks mostly to the big reduction in corporate taxes, but withholding taxes have also been weak. Meanwhile, strength in excise taxes and non withheld individual income taxes suggest that the economy is booming in some sectors, enough to keep the Fed on its tightening course. But what you really need to know is the Treasury cash…

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The Trump Tax Cut’s in Full Swing. But These Debts Don’t Look Good.

Tax collections fell in June as the Trump Tax Cut continued to bite into federal revenues. The fall in tax collections, combined with the rise in spending stemming from the Congressional Budget Busting Agreement signed by Trump, is causing an increase in the government’s issuance of Treasury bills, notes, and bonds, month in and month out.

That increase in supply puts downward pressure on bond prices and increases in interest rates and bond yields. It isn’t obvious in the bond market at the moment, since the 10 year yield has traded in a tight range around the 2.80s.  But short term T-bill rates are soaring, with the 13 week bill hitting 2% this week.

Meanwhile increased debt-financed deficits have kept the US economy running hot, but there are hints of slowing in current data. That’s not supposed to happen. Tax cuts and deficit spending are supposed to stimulate spending.

Click here to continue.

The post The Trump Tax Cut’s in Full Swing. But These Debts Don’t Look Good. appeared first on Lee Adler’s Sure Money.

Bulls Have the Edge, But This “Meat Grinder” Market Is Very High Risk

The volatility we have seen in the markets since early February is enough to put bears and bulls alike at unease. Prior to early February, the markets were climbing up and up, making it worth maintaining a long position and buying each and every dip.

Just have a look here at the SPX:

But early February was the warning shot across the bow for the bear market that I expect. If you had been following the advice that I published throughout the third and fourth quarters of last year and into January, you would have converted to 60-70% cash and saved yourself from the headache and loss, which that shot would have inflicted.

Since February, the markets have been up and down. There are times when the market gets locked into a trading range and the market chops and churns, and the past 6 months have been a case in point.  I call these periods “meat grinder” markets, because they tend to chew traders up.

Nevertheless, I’ve been on record saying that a bear market will arrive soon – and I had anticipated that it would arrive even sooner. But when things go against our expectations it’s critical not to panic. We must continue to watch the charts, and stick to our analysis and conclusions about what is fueling the larger emerging trend.

So I harken back to three ideas that I’ve been harping on, all of which point to increased market risk.

The post Bulls Have the Edge, But This “Meat Grinder” Market Is Very High Risk appeared first on Lee Adler’s Sure Money.

My Crucial Bearish Indicators, Plus a Critical Bullish One I Missed

Based on both my cyclical/technical analysis and liquidity analysis, I had a July 10 deadline for the end of the strong period for stocks. We’re now a week past that point and the market remains a tad higher than it was on July 10, and higher overall than I anticipated. When the market misaligns with the projected timeframe of my analysis, it’s time to ask whether I’m wrong or just early. As I do my research, that question is never far from my mind.

It’s important to always do a little post mortem when things don’t go as expected. In doing so, I try to figure out what happened and what I missed that caused the market to operate outside my expectations. That can help me make a course correction in my current forecast. At times, it can even help me recognize a new or different indicator that provides me with a deeper understanding of what’s driving the market, and where it’s ultimately headed.

While I cannot possibly account for every fluctuating input influencing the market direction, I try to recognize those that are most important.

That’s why I’ve organized a handful of the most important indicators that I’ve been using, as well as a couple that perhaps I should have given more consideration.

The post My Crucial Bearish Indicators, Plus a Critical Bullish One I Missed appeared first on Lee Adler’s Sure Money.