Closing Thoughts for the Week

We got more evidence this past week that conditions may be getting worse. What was the best performing sector of the week? Again, it was utilities gaining more than 4%. Consumer staples and healthcare also outperformed the broader market. Gold was up 2.7%. Long-term Treasuries posted a modest gain. The dollar was up again. Does this sound like a risk-on market to you?

Here’s the way I see it. The GDP growth rate slowed considerably in Q1. The inflation rate is moving higher again. Now, the labor market may finally be showing some cracks. These three factors may be the most important ones in all the financial markets and they’re all trending in the wrong direction. Plus, we’re still in a currency crisis.

If you were looking for recessionary signals this week, you had plenty of catalysts to choose from. This week’s disappointing Q1 GDP reading managed to shake the markets and for good reason. If this is a sign that inflation and high interest rates and monumental consumer debt are finally starting to take their toll, this might not be the last quarter where the economy has a GDP issue.