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Estimated read time: 2 minutes and 40 seconds

In this week’s newsletter:

1. Market recap

2. Top holdings: what I am buying & selling

Market Recap

YTD returns:

• S&P 500: +9.18%

• Nasdaq: +20.94%

• Russell 2000:+0.71%

• US Dollar ($UUP): +1.62%

• Gold ($GLD): +8.93%

Quiet week of data so let’s dive into some charts:

Leading Economic Index

The LEI consists of a composite index that combines several individual economic indicators, each of which has shown a strong correlation with future economic performance

The purpose of the LEI is to provide insight into the direction of the overall economy, typically looking forward six to nine months. By analyzing the leading indicators, economists and policymakers can gain a sense of where the economy may be heading and make informed decisions accordingly.

The components are the LEI are:

1. Average weekly hours worked by manufacturing workers indicates consumer income and business demand for labor to engage in ongoing production.

2. Average number of initial applications for unemployment insurance indicates possible changes in unemployment, which reflects the level of business activity and affects consumer income.

3. The volume of manufacturers' new orders for consumer goods and materials indicates businesses' short-term operational spending.

4. The new orders index from the Institute for Supply Management's Purchasing Managers Index (PMI) indicates whether orders for various manufactured goods are increasing or decreasing.

5. The volume of new orders for capital goods (except aircraft), unrelated to defense, indicates business plans for longer-term future production involving durable capital.

6. The number of new building permits for residential buildings indicates future spending on construction projects.

7. The S&P 500 stock index indicates the total value of the business sector and the nominal wealth of stock holders in the economy.

…oh boy.

Directionally, we know that GDP is decreasing over the next quarter or two. Could you imagine if GDP touches the dreaded ‘0’ line? What if it goes negative??

The LEI is reaching levels last seen when the economy was shutdown due to Covid. While the market seems fine to the average investor, looking under the hood should signal risk-off.

Remember, the goal in investing is not to make money. It’s to avoid LOSING MONEY.

If you lose -10% in an investment, you have to gain 11% in order to get back to breakeven. It’s math.

Why isn’t anyone talking about how aggressive the US consumer has been with credit?

In an economy where a large number of individuals are heavily reliant on credit and have high levels of debt, there is an increased risk of financial instability. A sudden economic downturn or increase in interest rates could lead to widespread defaults and financial distress….

Recession on the horizon? Rising interest rates? Phew, thank God those two things are an issue (please read that with sarcasm)

Take a look at the below graph and then look up how high credit card interest rates have gotten:

But don’t you worry, our fearless leader Cramer sees greener pastures ahead!

In The Account | my top holdings

1. GOLD - $GLD

   1. What a buying opportunity in Gold this past week with rates correcting after a big down move. Gold is rate sensitive, and with growth slowing comes long-term rates declining. BUY. GOLD.

2. BONDS

   1. $IIGD

3. UTILITIES, HEALTH CARE, LOW BETA

   1. Also rate sensitive sectors

On The Radar | positions I want to build / sizing up

1. NONE

Off The Grid | removed positions / short selling opportunities

1. INDUSTRIALS - $XLI

2. HIGH BETA - $SPHB

3. RETAIL - $XRT

4. ENERGY - $XOP

5. TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX

6. CRYPTO - $BITO, $MSTR

7. HIGH YIELD - $HYG

8. FINANCIALS - $XLF

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.