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heavy trucks, silver, and endorphins

user profile picture davefairtex Mar 05, 2023
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Four economic reports this week:

  • Auto/Light Truck Sales: -6.2% m/m, heavy truck sales: -11.9% m/m.
  • Durable Goods: new orders -4.5 m/m, prior +5.1% m/m, shipments -0.1% m/m.
  • ISM Services Index: 55.1 (flat = 50.0).
  • PMI Manufacturing Index: 47.3 (flat = 50.0).

So ISM Services remains hot, there’s a contraction in manufacturing, durable goods could be topping out, auto sales weakened somewhat, but the heavy truck component of auto sales fell substantially.

Heavy Truck sales appear to be a leading indicator for recessions.  Back in 2007, heavy truck sales fell off a cliff, and one year later, presto – we were in a recession.  Curiously, same thing happened in September 2019 (“someone” knew the pandemic was coming?), as well as the recession-that-wasn’t in 2016, to a lesser extent.  Now we see what might be the start of another similar move, which started in January 2023.

Rates moved higher this week, especially that 6-month treasury (+12 bp), which is now well above 5%.   Looks like the market is predicting another couple of rate increases, but they think it might stop within 6 months, give or take.  That’s just my read of the tea leaves.

The 10-year rose 13 bp this week, and may now be headed for a breakout above the previous high of 4.21%.  This isn’t normal-recessionary behavior – normally money races into the 10-year during recessions, resulting in dropping 10-year yield rates.  But not now.  Does this mean “no recession”?  Or is it something else?  The easy answer: Big Money is terrified of buying long-dated government bonds and/or foreign holders are selling their collection – while they still can.

The master resource (crude) rose 3.36 [+4.40%] to 79.68.  Crude has spent (roughly) the past 15 weeks tracking sideways, with the $80 price point acting as strong resistance.  Currently crude’s trend is mildly positive.    My guess: crude really needs a strong close above $80 to mark a reversal.  Gasoline did much better, rising 0.17 [+6.55%] to 2.75, which is a new 15-week high.   Natgas screamed higher, up 0.46 [+18.09%] to 3.01.   Natgas appears to have put in a low.

Still no restart of the WEF/Biden-Handler thievery from the SPR, which is good news. 

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