Control Panel: Trends continue

The trends noted in last week’s Control Panel are continuing. The stock market indexes are climbing steadily to new records with minimal noise. Treasury yields are falling.

The markets are gradually backing away from risk. The risk panel shows neutral risk since the SPX and junk bonds are not advancing faster than Treasuries. The Bullish Percent Index is falling. The Fear & Greed Index has dropped to Greed from Extreme Greed.

Gold has soared to an all-time high. Silver rose but is still within its stable channel. The USD is within the channel that began in January 2024. Oil is in a gradually rising trend and continues to rise since January 2024. Natgas continues to bounce along in the basement.

The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2024 was 2.5 percent on March 7. This shows a slowing economy since their forecast was 4% at the end of January.

If everything stayed just the way it is now things would be pretty copacetic although inflation is still too high and the labor market is still too tight (0.7 unemployed person per job opening). Current real GDP growth is sustainable. The unemployment rate is near a 40 year low though fractionally higher.

There is no reason for the Fed to cut the fed funds rate. The options market doesn’t expect a cut until June. Regardless of how the asset markets are chomping at the bit the Fed will not risk cutting too soon for fear that inflation will re-ignite.

There aren’t any news stories that impact the Macro economy. The underlying trends are up but the markets are so extreme that the retreat from risk is concerning. If the mood suddenly flips to risk-off there could be a cascading effect. But so far it’s subtle.

The METAR for next week is sunny.