Stocks peak about every 36 years, most recently in 1929, 1965, and 2000. This 36 year cycle can be traced all the way back to the earliest eras in recorded human history, back to Pythagoras and Plato and the Axial Age around 600BC. After each peak comes a period of decline (punctuated by bear market rallies) that typically lasts 16 years or so. Then, with the excesses of the prior bull period wrung out and investors most depressed, the next 20-year run to the next market top can begin. We're in that Golden Age now – take advantage of it!
Howdy, Bull-Riders:
The Fed met and said the economy is much stronger than they expected but they still expect three quarter-point reductions in the Fed funds rate this year. I think they’re wrong on both counts. You could obsess over the gory details or you could just look at all you need to know:
Wednesday's daily price action
Market Outlook
As I anticipated, the sideline cash is pouring into stocks. This is how temporary tops are made.
h/t @Michael__H1
The S&P 500 added 1.7% since last Thursday to a new record closing high – thank you Jpow! The Index is up 9.9% year-to-date. The Nasdaq Composite gained 1.5% and is up 9.3% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 0.7% which brings it to the same +0.7% year-to-date. The small-cap Russell 2000 won the week, up 2.7%, and is up 3.5% in 2024. There's a lot of chatter about how cheap small cap is relative to large cap, so maybe the Russell is about to get a tailwind.
The fractal dimension continues its push into record deep territory. The inevitable correction probably will be sizable.
Economy
The Atlanta Fed's GDPNow model forecast for March quarter real GDP slipped slightly to +2.1% due to a bit softer outlook for personal consumption expenditures growth and private domestic investment growth. The Blue Chip economists are up to the same level, so we probably are looking at an up quarter, but not a barnburner.
Big Tech
Why do investors want to own Big Tech? Because their net profit margin of 23.4% is more than double that of the rest of the S&P 500. (Big Tech is defined as Amazon, Apple, Google, Meta, Microsoft, and Nvidia.)
h/t @Barclays
Gold exchange-traded funds are showing the second-largest outflow year-to-date, even though they yellow metal is at all-time highs. There's lots of sideline cash to drive gold higher. (And note the commodities and energy outflows, too. The contrarian in me is delighted to see this.)
h/t @EricBalchunas
A lack of faith in traditional investments has fueled a new China gold rush into gold beans.
h/t @chigrl
Coming Events for Free Subscribers
All times below are ET.
Tuesday, March 26
Short Interest - After the close
Thursday, March 28
December quarter GDP - 8:30am – Third Estimate
Friday, March 29
Markets Closed - Good Friday
Personal Consumption Expenditures Index - 8:30am – Core PCE is Fed's favorite!
Golden Age Portfolio Update
This was a good week for the portfolio as it added 2.8%. to almost get back to the all-time high. We're now up 23.9% with much more to come. Let's dig in...
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h/t @WinfieldSmart
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In 1800, the global child mortality rate was above 40%. Today, it’s 3.4%. The world’s best-scoring country back then (Belgium: 33%) suffered from child mortality twice as high as the worst-scoring country today (Angola: 17%). In 1800, Belgium had the world’s highest life expectancy, at 40. In 2024, no country has a lower life expectancy than 40.
h/t @OurWorldInData
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Your Editor,
Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.