The major averages were unable to add to their recent gains this week. Failing to climb higher after geopolitical tensions increased over Greenland and Iran. While Fed Chair Jerome Powell saw his criminal probe widen. Leaving the major averages with small losses. Since last Fridays close the S&P 500 slipped 24 points or .35%, the NASDAQ finished fractionally lower, while the DOW dropped 260 points or .53%.
The Widowmaker
The infamous trade requiring investors to short Japanese Government Bonds on the idea that yields would spike leading to plunging prices. Finally got some of its own back when Japanese 30-year government bond yields spiked to a post 1999 lifetime high of 3.91%, earlier this week. Proving once again that even a broken clock can be right twice a day. Thanks to WolfStreet for the chart.
Media Doom and Gloomers
Continue to insist that economic and market Armageddon is just around the corner. Keep getting trounced by the data. As consumers continue to spend with abandon up .5% in November and 5.4% from a year ago, per the Bureau of Economic Analysis. Pushing the savings rate down to 3.5%. As an FYI a positive savings rate shows that spending growth isn’t funded by debt, but with income. It’s hard to say the “sky is falling” with a straight face after looking at the chart below thanks to WolfStreet.
It’s The Economy Stupid
Strong personal income growth, solid corporate earnings and impressive consumer spending is a recipe for robust economic growth. The final 3rd quarter GDP estimate was revised up to an eye opening +4.3%, far higher than the 3.2% that was expected, and a more than 2-year high. Growth higher than expected and increasing, inflation moderating, no ruinous tariff driven trade war. It seems the “experts” are staring at another year of being wildly wrong with their doom and gloom predictions. As my best guess is that inflation will moderate further this year, employment growth will pick up from its currently anemic levels. Solid economic growth will continue. Dare I say it? Tariffs are going to be proven a great idea, along with closed borders. Who knew?
Have a great weekend everyone! See you next Friday.
Last Week’s Post: Show Me the Money
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