(384 words, ~ 4 minute read)
Even though Supersonic was Oasis’s debut single, their song Definitely Maybe sums up today’s markets perfectly. We’re definitely maybe in for a recession or soft landing.
Since it’s Friday I’m going to quickly review several key economic growth indicators and see if any consensus emerges.
Growth indicators
| Indicator | Notes | Risk asset conviction |
|---|---|---|
| Dr. Copper | In equilibrium, short-term trend down | Inconclusive |
| Chinese Equities (reopening) | Short-term weakness emerging | Inconclusive |
| Bond Volatility | Clear trend lower | Bullish |
| Commodities | Weak trend lower, critical support level holding | Inconclusive |
| US 10yr nominal yield | Big technical triangle, yields trending higher | Bearish |
I wrote about the technical triangle formation yesterday if you want to learn more.
As you can see from the table above and the best case is equities are taking a breather and digesting January’s monster rally. Oil got a boost this morning as Russia announced they were cutting production in retaliation for sanctions. Oil and oil stocks are catching a bid. This helps the bullish case.
On Tuesday we get CPI data. This is a big data release. It will be interesting to see if inflation continues to trend lower, or do we get some crazy number like January’s NFP blowout. I wrote about NFP last week, the post is here if you want to check it out.
Canadian job data was released today and it was red hot. Another +150k jobs added while economists missed the mark again, forecasting +15k. It’s a stay of execution for Canadian consumers. A consumer with a job can pay their mortgage and credit card minimums.
Final thoughts
To be honest, I get the feeling yields are going to trend higher short-term. It’s just a gut feeling, but if I’m right finding a seat on the sidelines until Tuesday’s CPI seems logical. Event risk around CPI is huge. Equities look burnt out and the key growth indicators are collectively inconclusive.
On Monday I’ll update the ETF portfolio and the base case economic outcome probability distribution. Nerdy stuff but it’s important.
Until the, if all else fails just spin an Oasis album and fantasize about being a Rock ‘N’ Roll Star.
Have a chill weekend.
Thanks for reading!
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