In recent weeks, the S&P 500 has experienced a significant upswing, recovering all the losses incurred during January and February. This remarkable rebound has fueled optimism among investors, leading some to suggest that the long-standing bull market is back on track, with upward momentum taking charge once again. However, the real challenge lies ahead. The key question remains: is this surge a mere dead-cat bounce in a bear market, or a true resurgence that could render tactical asset allocators—who have recently adopted a cautious stance—misguided?
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● The Chicago Fed reports that the US economy underperformed in February | MarketWatch
● Existing home sales in the US plummet, signaling potential issues in housing | Reuters
● Federal Reserve’s Lockhart mentions that an April rate hike is on the table | RTT
● PMI indicates growth in the Eurozone has ticked up for the first time in three months | Markit
● Solid growth in Germany’s service sector vs. slowing manufacturing | Markit
● Eurozone consumer confidence declines for the third consecutive month in March | WSJ
● Global economic uncertainty remains prevalent | Dallas Fed
The US economy maintained a moderate growth rate last month, albeit slightly below historical trends, according to the Chicago Fed National Activity Index update. The three-month average (CFNAI-MA3) rose slightly to -0.07 in February, which aligns with The Capital Spectator’s earlier projections. The primary takeaway: the risk of recession remained relatively low last month, echoing findings from last week’s macroeconomic profile of the US.
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Last week saw continued positive momentum across major asset classes, as indicated by a collection of proxy ETFs. For five consecutive weeks through March 18, the risk-on trade produced profits universally. Although the trailing one-year performance still shows significant losses, the number of losses is diminishing, leading to a more balanced field of winners and losers.
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● The University of Michigan’s US Consumer Sentiment Index drops to a five-month low in March | UoM
● Business inflation expectations in the US remain stable at 1.8% for March | Atlanta Fed
● Richmond Fed’s Lacker states that inflation expectations are well anchored | MNI
● The ECB has room to reduce rates further if new shocks occur | RTT
● China’s central bank warns that high corporate debt poses a risk | CNN
● Obama is set to meet Raul Castro during a historic trip to Cuba | Reuters
● Conspiracies of the Ruling Class: How to Break Their Grip Forever
By Lawrence B. Lindsey
Review via Kirkus Reviews
In this provocative argument for the preservation of liberty as envisioned by the Founding Fathers in 1776, Lindsey, a former director of the National Economic Council and CEO of the Lindsey Group, posits that a ruling class—comprised of those who see themselves as “superior beings destined to govern”—has historically operated from within government under the facade of public service. These individuals, rather than genuinely serving the public, are concerned primarily with consolidating their power and directing how others should lead their lives. Today, Lindsey asserts that this ruling class, which identifies as progressive or liberal, believes itself to be more intelligent than those they label as conservatives. Their progressive ideology dominates society, leading to a surprising revelation for many liberal readers: Lindsey suggests that the very progressives they believe are an elite 1 percent holding America captive are actually the source of its challenges.
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The three-month average of the Chicago Fed National Activity Index (CFNAI) is anticipated to show a slight rise in the February update, due on Monday (March 21). The Capital Spectator’s average point forecast indicates an expected value of -0.08, slightly better than the previous month’s data. This reflects US economic activity that is moderately below the trend rate of growth. A CFNAI value below -0.70 is considered to indicate an increased likelihood of a recession, according to the Chicago Fed’s guidelines. The forecast for February is expected to confirm an expansion that, while below historical trends, remains above the critical threshold that signifies the onset of a recession in the US.
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The US stock market showed significant recovery yesterday, with the S&P 500 reaching its highest point this year. This rise followed the Federal Reserve’s decision to pause on interest rate hikes, citing increased macroeconomic risks both domestically and internationally. However, if the stock market is positively responding to expectations of prolonged lower interest rates, could the concurrent rise in inflation forecasts in the Treasury market pose a challenge for this stock market rally?
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● The streak of low jobless claims continues, marking the longest period in over four decades | WSJ
● US job openings rose to 5.54 million in January | Bloomberg
● The US job market’s stumble in January is likely to be a temporary setback | AP
● The US Leading Economic Index showed positive movement in February | CB
● The US Consumer Comfort Index rose to a one-month high last week | Bloomberg
● The Philly Fed manufacturing index has turned positive for the first time in seven months | MarketWatch
● The Dow closed positively for the year as commodities saw a rally and the dollar weakened | Reuters
Recent economic indicators suggest that the US economy is poised for continued moderate growth. While macroeconomic risks have escalated in recent months, the likelihood that a recession began last month remains low. Current data indicates a promising near-term outlook, suggesting that the economy may successfully avoid any downturn.
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