Market Brief – Thursday 4/4/19

Stocks and Treasury yields started the day slightly higher on reports of a summit being sent between President Trump and President Xi, which was shortly denied by President Trump. Stocks and Treasury yields faded their opening gains after President Trump denied there was a date being set.

Germany continues to dive headfirst into a recession as German Industrial Orders collapsed at a -8.2% annualized rate in February which marks the seventh straight month of declines. As I have said, the next global recession is likely to start in Europe.

Initial jobless claims just tagged their 50-year low as investors look optimistically to tomorrows Nonfarm Payroll numbers to show a strong labor market. Keep in mind, the March payroll numbers reflect hiring decisions going back to December 2018 when stock prices and retail sales were falling. If the payroll numbers are strong, it will invalidate all the negative economic news and if it is weak, it will validate all the negative economic news.

Stocks closed slightly higher under very light volume and Treasury yields slightly lower as investors await tomorrow’s payroll report. Physical gold saw early selling followed by eager buyers, which helped propel the largest gold mining ETF back over its 50-day moving average. After yesterday’s crude oil build, buyers drove the oil and gas producer’s ETF back over its 50- and 100-day moving averages. Agricultural commodities vaulted over their 100-day moving average where they quickly ran into resistance.

On an annualized basis, the M2 money supply is holding at 4.04%, the six-month growth rate is at 1.90% and the three-month growth rate is at 0.50%. The three-month growth rate is predicting that the annualized growth rate will soon fall under 3.70%, which is historically where depressions and recessions have occurred.