• Economists are increasingly bullish on consumer spending growth this year.
  • Business investment projections are also getting upgraded.
  • The average monthly job gains estimates for this year are nearing 180k.

 

 

  • Economists keep increasing their projections for this year’s core PCE inflation.

 

 

  • Forecasters now see only two Fed rate cuts this year, and they continue to move up their projections for the 10-year Treasury yield.
  • Wholesale vehicle orders have been up for six months in a row.
  • The updated U. Michigan sentiment index shows a smaller decline in May compared to an earlier estimate.

 

 

  • The recent boost in government consumption and investment is starting to slow.
  • The market no longer expects two Fed rate cuts this year, with only 31 bps of reductions currently priced in.

 

 

  • US economic indicators have been surprising to the downside in recent months.

 

 

  • Treasury yields have been rising, exerting pressure on risk assets.

 

 

  • The Fed’s Beige Book points to modest growth, with softer demand limiting price increases.

 

 

  • The Q1 GDP growth was revised downward, primarily due to softer consumer spending.

 

 

  • Rising layoff announcements point to higher unemployment claims ahead.

 

 

  • More states are experiencing deteriorating labor market conditions, which is typically consistent with a recession.

 

 

  • Full-time employment has been declining relative to part-time employment.

 

 

  • Here is Goldman’s projection for job growth.

 

 

  • Home sales registered their biggest decline since early 2021 on a seasonally adjusted basis.

 

 

  • A higher proportion of sellers have been forced to drop prices, as homes take longer to sell.

 

 

  • But sale prices remain well above last year’s levels.

 

Source: Redfin

 

Market Data

 

  • Silver hit the highest level in over a decade.

 

 

  • The S&P 500 has risen in 23 out of the last 30 weeks. The last time we were above that level was in 1989.

 

 

  • Transportation stocks have been struggling.

 

 

  • Market breadth has been deteriorating.

 

  • Here is the Nasdaq advance/decline line.

 

 

  • Major indices, excluding those driven by tech megacaps, have now fallen below their 50-day moving averages.

 

 

  • Tech stocks are trading at the highest multiple since the dot-com era.

 

 

  • Hedge funds have been bullish on semiconductors.

 

 

  • Newly funded AI startups (the second panel shows the same data adjusted for GDP):

 

 

 

Great Quotes

“When I let go of what I am, I become what I might be.” – Lao Tzu

 

Picture of the Week

Monastery, Thessaly, Greece

 

 

All content is the opinion of Brian Decker