Making Hay Monday – March 3rd, 2025
Making Hay Monday
Mid… But Not Middling
GDPNow
The Atlanta Fed’s GDPNow estimate is one of the most accurate and, also, real-time measures of U.S. economic activity. Because it is highly sensitive to incoming data, it does tend to swing more quickly and violently than typical mainstream economic forecasts. The precipitous plunge displayed by this model lately, which leaves it far outside the range of most economists, might be an aberration. (It is likely being negatively impacted by the import surge, to beat tariffs, which reduces GDP.) However, it does sync with an array of recent releases that are revealing sudden and alarming weakness. For example, a recent Wells Fargo survey found that 76% of Americans plan to reduce their spending in 2025 (a most un-American attitude!). The biggest pullbacks are intended for discretionary items such as travel, vacation, and home-related expenditures, per the crack team at Rosenberg Research.
Wiesenthal, retrieved from TFR
One of the points this newsletter has made over the years is that charts displaying breakouts and breakdowns – range expansions out of multi-year bands or channels – are not only predictive with stocks, bonds and commodities but with economic data, as well. The above visual from Joe Weisenthal is ominous in that regard. If this was an isolated datapoint, it could be dismissed as interesting but not very meaningful. Yet, unfortunately, that is not the case; rather, this is consistent with a pattern seen this year. Further, the housing and auto industries, and all their related sub-industries, tend to be the leading edge for job gains and losses. Both look to be on the verge of significant layoffs. Also in line with this is the spread between how consumers view their present situation (decent) vs expectation for the future (weak). This gap has tumbled to levels that were previously seen on the eve of previous recessions. (Kudos again to Team Rosenberg.)
“The reality is you’ve got a brew of sticky inflation, slowing growth and austerity in the government, so I’m actually pretty negative for the first time in a while.” -Hedge fund titan Steve Cohen (hat tip to Jesse Felder for catching this)
“While we expected DOGE to drive US economic weakness (given Federal outlays are ~25% of GDP), we have been surprised how quickly the softness has arrived and how broad-based it has been.” -Luke Gromen, in his February 28th, 2025, Forest for the Trees (emphasis ours).
“This is an unprecedented setup in US markets in our careers – investors would be prudent to hedge risk via puts on NDX and SPX, raise some cash, continue to accumulate gold bullion, and get low over their skis.” -also from Luke Gromen in his 2/28/25 Forest For the Trees newsletter (words I’ve rarely heard him convey)
Mid… But Not Middling
Shutterstock
Champs
There aren’t that many historical stock-market data sets that catch us off guard, but we have to admit that in researching this Making Hay Monday (MHM) one definitely did. We suspect it might surprise you, as well…
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