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Trump Matrix

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Market data has remained mixed.  The weak Q1 GDP is not consistent with some of the most important measures.  This week I expect pundits to be asking:

Will the jobs report signal continued strength?

Personal Note

In response to reader interest I am trying to do an abbreviated WTWA when I am away.  I will include the update of indicators and a few ideas about what I am watching.  Some noted that this would also provide a forum for some of our “regulars” to congregate.

Theme Recap

In my last WTWA I predicted a week of rebuilding the wall of worry.  Some problems have been avoided, even if not completely solved.  There are always new ones, and we did get some of that discussion last week.

The Story in One Chart

I always start my personal review of the week by looking at a chart of market performance for the week.  Once again, there was little change for the week.

Whatever the news, the net market effect was (once again) very small.

The News

Each week I break down events into good and bad. Often there is an “ugly” and on rare occasion something very positive. My working definition of “good” has two components.  The news must be market friendly and better than expectations.  I avoid using my personal preferences in evaluating news – and you should, too!

The Good

The best news is the strength of the earnings rebound. This is true both for year-over-year results and forward expectations. (Brian Gilmartin).

While the government shutdown deadline was merely extended for a week, I am encouraged by the handling of this issue.  The market hated this uncertainty on the past.

The Bad

The soft GDP numbers and uptick in initial jobless claims (not the time reflected in Friday’s payroll report) were the worst news.

The Ugly

Still Korea.

What to Watch For

Everyone wants to evaluate the Trump agenda, especially reflecting on the first 100 days.  I do not expect movement on any of the big issues without some participation by Democrats.

The key economic reports are ISM, the ADP private employment, and the official employment report.  It is a big week for data.

While there is no change expected from the FOMC meeting (and no press conference), everyone will be watching for hints on the pace of rate hikes.


Quant Corner

We follow some regular featured sources and the best other quant news from the week.

Risk Analysis

Whether you are a trader or an investor, you need to understand risk.  Think first about your risk.  Only then should you consider possible rewards.  I monitor many quantitative reports and highlight the best methods in this weekly update.

The Indicator Snapshot



The Featured Sources:


Bob Dieli:  The “C Score” which is a weekly estimate of his Enhanced Aggregate Spread (the most accurate real-time recession forecasting method over the last few decades).  His subscribers get  Monthly reports including both an economic overview of the economy and employment.

Holmes:  Our cautious and clever watchdog, who sniffs out opportunity like a great detective, but emphasizes guarding assets.

RecessionAlert: Many strong quantitative indicators for both economic and market analysis.  While we feature his recession analysis, Dwaine also has several interesting approaches to asset allocation.  Try out his new public Twitter Feed.

Georg Vrba: The Business Cycle Indicator and much more.  Check out his site for an array of interesting methods.  Georg regularly analyzes Bob Dieli’s enhanced aggregate spread, considering when it might first give a recession signal.  His interpretation suggests the probability creeping higher, but still after nine months.

Brian Gilmartin:  Analysis of expected earnings for the overall market as well as coverage of many individual companies.

Doug Short: The World Markets Weekend Update (and much more).  His Big Four chart is the single best method to monitor the key indicators used by the National Bureau of Economic Research in recession dating.  The latest update now includes the employment data.


Final Thoughts


Here is an update on my “Trump Matrix.”  Last week’s timber tariff decision shows why it is important to track what the administration can easily accomplish versus what requires cooperation with other governments or Congress.

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