Goldilocks Economy -- May 5, 2023

Locator: 44571ECON.

Goldilocks economy? Doubt me? See Hong Kong way down below.

Why did the Dow jump 550 points today? 

First two facts, the sundae:

• earlier in week: Fed signals a pause or an end to rate increases;
• two days later: jobs number crushes expectations.

Cherry on top of that sundae:

• the banking crisis seems contained (at least for now).

At some point we're going to start hearing commentary along this line:

• the US economy is "on fire" (great)
• the Chinese economy is gradually recovering
• Europe survived the energy concerns of winter

Inflation is not due to government spending (don't take that out of context):

• current inflation is due to supply chain issues; though improved, supply chain issues have never fully recovered
• some supply chain issues are due to raw material issues in third world countries due to Covid; 
• a lot of Americans are unaware of how bad Covid affected lithium miners, for example, overseas, as just one example; 
  
• some supply chain issues are due to "things" like the construction boom in California (reported to be the biggest construction boom since the Great Depression [almost one century ago])
• much of the supply chain issues are due to tectonic changes in attitude (EVs: lithium, semiconductors)

The second cherry on that sundae:

• earnings.
• AAPL's earnings yesterday

So, if you are an investor, think about this:

• the Fed signals a pause; could cut;
• jobs number suggests economy is "on fire";
• construction boom in California -- not on anyone's bingo card;
• earnings so much better than anticipated; AAPL reassured everyone;
• banking crisis -- contained going into the weekend.
• layoffs: have peaked.
  

Result:

• Dow up 550 points today.

 

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Hong Kong

Link here.