- Capital Contrarian
- Posts
- GDP Freefall
Estimated read time: 2 minutes and 22 seconds
In this week’s newsletter:
Market recap
Top holdings: what I am buying & selling
Market Recap
YTD returns:
S&P 500: +8.59%
Nasdaq: +16.82%
Russell 2000: +0.4%
US Dollar ($UUP): -0.25%
Gold ($GLD): +8.95%
GDP Rate: 1.1% Actual, 2% Forecasted, 2.2% Prior
Before we dive into the report, let’s just marvel at the Atlanta Fed’s slashing of their GDP forecast the day before the actual report came out.
I’m glad they are finally getting the “slowing growth” concept…but changing their forecast a day before the report is down right pathetic.
If we look at this rate of change on a yearly basis we can clearly see the “bubble” that was 2021. It’s no surprise that stocks of all kinds ripped that year - that’s what happens when RoC goes vertical!
Now that it’s coming down, sharply, stocks have a mixed message. Enter - 2022 stock market returns.
A slowing GDP report can have significant negative effects on the economy. First, a slowing GDP report can lead to lower employment rates. When economic growth slows down, businesses tend to reduce their hiring and may even lay off workers to cut costs. As a result, the unemployment rate may rise, which can lead to a decline in consumer spending and further economic slowdown.
The next unemployment report comes out on May 5th
A slowing GDP report can also lead to a decline in consumer confidence. When economic growth slows down, consumers tend to be less optimistic about the future, which can lead to a decrease in consumer spending. This can have a significant impact on the economy, as consumer spending accounts for a large portion of GDP.
When consumer spending declines, businesses may reduce their production levels, which can further reduce economic growth. It’s simply known as the domino effect…
Despite the way the market reacted to the report (S&P 500 ripped 2% Thursday when the report came out), earning seasoning is certainly showing that certain companies are deteriorating.
Microsoft and Google’s management teams said “AI” 142 times on their earnings call this week…because when your core business is slowing, just say something flashy and fun to get investors excited about the future!
And to wrap this all up, if you’re still watching CNBC I suggest you cut the chords and stop paying for cable. The media is full of garbage.
Take JP Morgan for example….oof, big swing and a miss on those estimates!
In The Account | my top holdings
GOLD - $GLD
No change to this strategy
Good buying opportunity in $GDX as well (lower position size because of its higher beta)
BONDS
These are getting bigger, faster
$BNDD, $EDV, $TLT, $IIGD
UTILITIES, HEALTH CARE, LOW BETA
Three good sectors in a slowing growth environment. Yes, I can buy things that aren’t just Tech!
On The Radar | positions I want to build / sizing up
NONE
Off The Grid | removed positions / short selling opportunities
TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX
RETAIL - $XRT
HIGH BETA - $SPHB
CRYPTO - $BITO, $MSTR
HIGH YIELD - $HYG
ENERGY - $XOP
FINANCIALS - $XLF
INDUSTRIALS - $XLI
Until next week....
-BW
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
Estimated read time: 2 minutes and 22 seconds
In this week’s newsletter:
Market recap
Top holdings: what I am buying & selling
Market Recap
YTD returns:
S&P 500: -%
Nasdaq: -%
Russell 2000: -%
US Dollar ($UUP): +%
Gold ($GLD): +%
GDP Rate: 1.1% Actual, 2% Forecasted, 2.2% Prior
Before we dive into the report, let’s just marvel at the Atlanta Fed’s slashing of their GDP forecast the day before the actual report came out.
I’m glad they are finally getting the “slowing growth” concept…but changing their forecast a day before the report is down right pathetic.
If we look at this rate of change on a yearly basis we can clearly see the “bubble” that was 2021. It’s no surprise that stocks of all kinds ripped that year - that’s what happens when RoC goes vertical!
Now that it’s coming down, sharply, stocks have a mixed message. Enter - 2022 stock market returns.
A slowing GDP report can have significant negative effects on the economy. First, a slowing GDP report can lead to lower employment rates. When economic growth slows down, businesses tend to reduce their hiring and may even lay off workers to cut costs. As a result, the unemployment rate may rise, which can lead to a decline in consumer spending and further economic slowdown.
The next unemployment report comes out on May 5th
A slowing GDP report can also lead to a decline in consumer confidence. When economic growth slows down, consumers tend to be less optimistic about the future, which can lead to a decrease in consumer spending. This can have a significant impact on the economy, as consumer spending accounts for a large portion of GDP.
When consumer spending declines, businesses may reduce their production levels, which can further reduce economic growth. It’s simply known as the domino effect…
Despite the way the market reacted to the report (S&P 500 ripped 2% Thursday when the report came out), earning seasoning is certainly showing that certain companies are deteriorating.
Microsoft and Google’s management teams said “AI” 142 times on their earnings call this week…because when your core business is slowing, just say something flashy and fun to get investors excited about the future!
And to wrap this all up, if you’re still watching CNBC I suggest you cut the chords and stop paying for cable. The media is full of garbage.
Take JP Morgan for example….oof, big swing and a miss on those estimates!
In The Account | my top holdings
GOLD - $GLD
No change to this strategy
Good buying opportunity in $GDX as well (lower position size because of its higher beta)
BONDS
These are getting bigger, faster
$BNDD, $EDV, $TLT, $IIGD
UTILITIES, HEALTH CARE, LOW BETA
Three good sectors in a slowing growth environment. Yes, I can buy things that aren’t just Tech!
On The Radar | positions I want to build / sizing up
NONE
Off The Grid | removed positions / short selling opportunities
TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX
RETAIL - $XRT
HIGH BETA - $SPHB
CRYPTO - $BITO, $MSTR
HIGH YIELD - $HYG
ENERGY - $XOP
FINANCIALS - $XLF
INDUSTRIALS - $XLI
Until next week....
-BW
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.