Overbought Territory, Day 70

August 11, 2025 • 1 minute, 21 second read

August has been a tumultuous month for each of the past 10 years.

Today, one-third of the way through the month, that trend is holding strong. And stocks have now posted their 70th consecutive day without dropping below the 50-day moving average:

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Markets are having one of their longest periods of technical strength since the start of 2024.

Last week, rising odds for an interest rate cut in September extended the S&P 500 rally.

Fed chair Jerome Powell remains stalwart. So far, only two members of the Fed board of governors have registered dissent and voted for a cut. One of them, Christopher Waller, tops Trump’s list to replace Powell.

Under Trump, anything can happen…

For now, the August surprise is to the upside for stocks.

~ Addison

P.S. While stocks continue to trend higher on a potentially weakening economy (jobs report), there’s a good reason. Even without Fed rate cuts, global M2 money supply — aka cash — is also hitting historic highs. Central banks around the world have been printing money like we’re already in a debt crisis.

That bodes well for assets like bitcoin, which jumped back over $120,000 over the weekend – and gold, which broke $3,500 briefly last week.

Hard assets have more room to run – gold is still nowhere near our price estimate.

Keep an eye out, both gold and bitcoin will likely hold up well in a garden-variety market pullback. In a massive drop, which tends to lead to liquidations across the board, however, all bets are off.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?

September 16, 2025 • Addison Wiggin

Our fiscal reality is clearly unsustainable. With the passage of the “Big Beautiful” budget reconciliation bill, Congress has already given itself permission to grow the national debt to $41 trillion. Interest payments on the national debt are already the second-most-expensive item on the federal budget, behind only Social Security (and ahead of defense spending). As the national debt continues to grow, debt service will become our number one spending obligation. History suggests it’s only a matter of time until we hit that limit and, unless things change, once again raise the debt ceiling. This cannot continue indefinitely.

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?

When Trust Runs Thin, Markets… Rally?

September 16, 2025 • Addison Wiggin

Bloomberg’s September survey of economists found that the majority are “somewhat or extremely worried” that the Fed’s decisions will be influenced by political loyalties.

If that happens, borrowing costs for the U.S. government rise as risk premia creep into Treasury markets.

Public confidence is already threadbare.

In 2001, 74% of Americans trusted Alan Greenspan to do the right thing. In 2025, only 37% say the same of Jerome Powell. For the first time, trust in Trump to manage the economy is higher than trust in the Fed chair.

The Tech Meltup, Exhibit A

September 16, 2025 • Addison Wiggin

Overall, the S&P 500’s RSI hit 70, the low side of overbought territory — for the entire index.

“Fed rate cuts tomorrow are likely priced in,” writes portfolio director, Andrew Packer, “it may not trigger a selloff, but at these levels, investors may be disappointed with a .25 cut.”

Tech investors will remain bullish on the prospect of multiple rate cuts over the next few meetings.

But be wary of any indication the Fed tries to rebuff Trump’s overtures and, God forbid, remain independent tomorrow.

Plowshares into Swords

September 15, 2025 • Bill Bonner

The empire is in decline. Demographics, regulatory tightening, fake money and the mis-allocation of trillions of dollars (much of it on pointless wars) have sapped the vitality of the economy. The Federal government gets bigger and bigger, but there is no longer enough output to pay for it.

The interest on the debt alone takes more more than a trillion dollars a year. The US faces a financial crisis. And for the first time in history, our children face a poorer future.

The welfare state model no longer works; the center — consensual democracy — wobbles towards the extremes. What to do? Beat our plowshares into swords?