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:
This morning's February Personal Consumption Index inflation report showed the core PCE rose 0.3% from January to February, down from 0.5% the previous month. Core prices rose just 2.8% year-over-year, down from 2.9% in January and the lowest such figure in nearly three years. Economists expected the YOY number to be over 3%.
h/t @Mayhem4Markets
Today's report showed a sizable 2.3% jump in energy prices that boosted the overall prices of goods by 0.5% in February. By contrast, inflation in services slowed to a 0.3% increase, a 3.7% annualized rate, from a 0.6% rise in January. While one good number isn't enough to spur the Fed to cut, especially when it is well above their 2% target, the report should keep the Fed in “High – but not higher – for longer” mode.
Next Friday, April 5, we see March payrolls. There is a simple rule to predict the beginning of a recession: A 10% rise in unemployed people.
h/t @MichaelKantro
To get there, we need to see services employment weaken. According to the St. Louis Fed, over the past 40 years, the services sector has grown to 79% of output, 85% of employment, 83% of companies, and 78% of household spending.
After stagnating for nearly 15 years, inflation-adjusted revenue per worker has increased sharply in the last couple of years to new highs.
h/t @BobEUnlimited
Market Outlook
After the best week since December, the S&P 500 added 0.4% since last Thursday, hit a new all-time high today, and set a new record of +27.3% for a 100-day return without a 2% decline. The Index is up 10.2% year-to-date, booking its best March quarter since 2019. The bullish reversal Wednesday indicates that another short-term low was made Tuesday without even hitting the 10-day moving average. The market keeps being very bullish and moves higher with minimal pullbacks even though the rate of ascent has been slower recently.
Yesterday it recorded its fifth consecutive all-time high monthly close. Strong future returns after these streaks are actually quite normal. It was higher a year later 26 out of 28 times (92.9%) and up 12.5% on average.
h/t @RyanDetrick
The Nasdaq Composite lost 0.3% but is up 9.1% for the year. But breadth is narrowing. Only 45.3% of stocks are above their respective 20-day moving averages, down from a high of 71.2% in December of 2023.
h/t @Mayhem4Markets
The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 1.4% as the nascent biotech recovery continues. It now is up 6.3% year-to-date. The small-cap Russell 2000 won the week again, jumping 2.5%, and is up 0.5% in 2024. Does anyone hold small cap stocks anymore?
h/t @BobEUnlimited
The fractal dimension is setting new records for the most amazing trend ever. Our insurance puts probably will expire worthless – that's what insurance premiums do – so next week we'll roll them out a couple of months.
BofA said the current secular bull market from the 2013 breakout above the prior highs from 2000 and 2007 is middle-aged and can last until the late 2020s into the early 2030s. As you know, I think it will top in the usual 36 years from the last top – 2036.
h/t @WinfieldSmart
Economy
US economic data surprises have now turned negative.
h/t David Kostin - Goldman Sachs
You know it’s getting bad out there when the RIFers are getting RIF’d.
h/t @BowTiedBiotech
Gold hit a record all-time high yesterday and the FOMO gold fund inflows have started:
h/t @dailychartbook
Just as Chinese gold imports surge:
h/t @hkuppy
One chartist is targeting $2,444 for this move.
h/t John Roque
Last week, I wrote: “The fractal dimension again is flirting with signaling a new trend, but we’ve learned to wait until it clearly happens to call it.” So gold said: “Hold my beer.”
That's a new trend that should last into early July, with a temporary top in early May.
Coming Events for Free Subscribers
All times below are ET
Friday, April 5
March payrolls - 8:30am
Golden Age Portfolio Update
This was another meh week for the portfolio as tech continued to waffle. Our commodity positions did well, though, holding the total portfolio loss to 1.0%. We closed the first quarter up 22.6% with much more to come. Let's dig in...
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Levels of Awareness In Politics
Level 1 - They believe what their preferred news say and do not sample other sources. Not aware of counter arguments. Not aware their news is mostly narrative.
Level 2 - Sample news from multiple sources but believe only their own sources are accurate. Think the other side is all narrative, but familiar with all sides of issues.
Level 3 - Aware that ALL news is fake, at least in the sense of missing context and spin. Also known as Gell-Mann Amnesia. But still believe the experts in various fields are usually correct.
Level 4 - Understand that NONE of our experts are reliable. Some might be right, but none can be trusted without verification. The distortion of money makes no expert credible.
Level 5 - They see the gears of the machine, Mike Benz style. The Republic no longer looks like whatever the Founders intended. The control of powerful billionaires and intelligence professionals is now obvious.
Level 6 - You are dead because you know too much. Also known as Epstein Level.
h/t @ScottAdamsSays
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The markets have changed dramatically since I joined American Express Investment Management.
h/t @dailychartbook
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Your reading about hyperinflation Editor,
Paid subscriber or not, if you would click the ♥ symbol below it would really help me get the word out.