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The GDP PCE ADP Waltz

Conference Board Economic Forecast: 

Looking into 2024, we expect the volatility that dominated the US economy over the pandemic period to diminish. In the second half of 2024, we forecast that overall growth will return to more stable pre-pandemic rates, inflation will drift closer to 2 percent, and the Fed will lower rates to near 4 percent. However, due to an aging labor force we expect tightness in the labor market to remain an ongoing challenge for the foreseeable future.

Yesterday, we had this to say about Bonds:

“The good news is the market has absorbed the bond’s performance. A better risk-on environment is when the SPY outperforms the long bonds.

“Talking technically, we are watching the October 2022 lows carefully. A potential double bottom exists if TLTs can clear back able 98. A move under 95, though, points more to a retest and possible break of the low 91.85.”

The whole market rallied, from bonds to small caps to metals and oil. Clearly, the economic statistics coming at us with blinding speed, more of a can-can than a waltz, has begun. Can everything move up together, or will the rally today resolve lower for some instruments while higher for others?

The relief rally in bonds, coupled with the dollar reversing closer weaker, helped everything run higher. If you watch the clip from The Final Bar that Mish guest-hosted alongside Keith, we showed you how this rally could happen, especially with volatility look like anything but volatility.

In the spirit of the forecasts, the expectation for 2024 remains for lower inflation, no recession, steady growth and a Fed that will begin to ease up on rates.

Sounds amazing right?

Enter the Dragon.

Silver is in a bullish phase. It is also outperforming the gold market, using the ETFs SLV and GLD. Furthermore, on the leadership indicator, silver is nowhere near overbought relative to gold. The gold-silver ratio has fallen below the 80 level, suggesting that silver will outperform gold prices going forward. Two reasons why are stimulus measures in China and robust industrial demand, as the U.S. looks to spend $45 million to develop domestic manufacturing with the solar power sector. Historically, silver often outperformed gold during periods of strong economic expansion and tended to underperform gold during periods of economic stress.  

With inflation persistent, we will continue to watch bonds and the gold to silver ratio. Plus, we are still focused on small-caps and IWM clearing 190. In the meantime, you all have a wonderful rest of the week and long weekend.

Mish is taking a few days off and will return September 5th.

Happy Labor Day weekend!


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If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at Benny@MGAMLLC.com.

“I grew my money tree and so can you!” – Mish Schneider

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Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.


Mish in the Media

Mish served as guest host for the Monday, August 28 edition of StockCharts TV’s The Final Bar! Mish puts her own spin on the Market Recap, starting with the indices and then exploring sectors using her “Economic Modern Family” analysis. She then sits down with Keith Schneider for an insightful interview. Keith discusses topics such as agricultural commodities, biotechnology, and volatility.

Mish and Charles discuss a secular bear market in bonds and why gold could outshine expectations in this appearance on Fox Business’ Making Money with Charles Payne.

Mish and Paul Gruenwald discuss soft landings, recession, inflation, GDP and China on Yahoo Finance.

Mish looks at a selection of popular instruments and outlines their possible direction of travel in this appearance on CMC Markets.

Mish talks NVDA and “Trading the Weather” in these two appearances on Business First AM.


Coming Up:

Mish will be on break starting August 30 and return Tuesday, September 5th.

September 7: Singapore Breakfast Radio, 89.3 FM

September 12: BNN Bloomberg & Charting Forward, StockCharts TV

September 13: Investing with IBD podcast

October 29-31: The Money Show


ETF Summary

  • S&P 500 (SPY): 440 support, 458 resistance.
  • Russell 2000 (IWM): 185 pivotal, 190 has to clear.
  • Dow (DIA): 347 now pivotal support.
  • Nasdaq (QQQ): 363 support and over 375 looks good.
  • Regional banks (KRE): Needs to hold 44 to be convincing.
  • Semiconductors (SMH): 150-161 range to watch.
  • Transportation (IYT): 252 biggest overhead resistance.
  • Biotechnology (IBB): Compression between 124-130.
  • Retail (XRT): 62.90 key support to hold.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education