Goldilocks Economy – Data All In
First, let’s talk economic data. As you know our thesis has been for a stronger than expected economy with tame inflation and “U” shaped jobs market. A lot of January data was released this week. This morning, we learned that inflation came in at 2.4% which continues the trend of lower and manageable inflation, and further supports my 2023 claim that inflation is basically dead and yesterday’s battle.
The problem is not inflation folks. The problem is that the cost to live is at an all-time high. There is a big difference. Life is expensive, but prices are only going up 2.5% per year which is below the historical average.
We also learned that the budget deficit fell sharply in January and the previous year due to tariff revenue, growth and higher taxes. While I remain very, very negative on using tariffs as an economic tool, the lower deficit is a huge positive for the economy, for now.
The January employment report was a blockbuster, showing 130,000 new jobs created, more than double the estimates. Unemployment fell to 4.3%.
Finally, the Bureau of Labor Statistics released their final annual audit which shows the economy created 898,000 fewer jobs from April 2024 to March 2025 than previously reported. That number was down from -911,000 as originally estimated. And please, please don’t email me about some government conspiracy that manipulates data or covers up data. As I have stated over and over, the data is accurate. It’s the collection method that is stale and crummy. Billions of dollars are needed to update it and neither party wants to spend the money.
The stock market had an ugly day on Thursday. The S&P 500 is approaching 6800 where the last two declines ended. The best scenario for the bulls would be a breach of 6800 for a day or two and then sharp snapback which would trap the bears and slingshot stocks to new highs.
I told you so. I told you. I told you. I told you. I knew the cold wave just wouldn’t last through the upcoming holiday weekend in Vermont where it may get into the 30s. BOO! Give me 15 degrees with cloudy skies and light winds every weekend. These balmy temps will surely bring out the crowds. BOO! And with few commitments after dinner with friends tonight, my car and I will be pointed north for a few days.
On Wednesday we bought more XLV and more EMB. We sold IT and some IWN. On Thursday we bought HYG, TMO and more MRNA. We sold GDX, GDXJ, ARKK, EFA, some UPS, some SBUX, some TSLA, some CRNX and some COMB.
