Goldilocks Economy; Market Must Have Liked February's Numbers -- End Of 1Q24 -- March 21, 2024

Locator: 46883ECON.

Updates

Later, 11:58 p.m. CDT: trending toward $84-WTI.

Later, 10:29 p.m. CDT, only a few hours after posting my note below -- the original note -- Barron's posted this:

Stocks were poised to rise in Monday trading as investors prepare for a full week of data on jobs.

At 6:15 p.m. Eastern time on Sunday, Dow Jones Industrial Average futures were up 0.2%, while S&P 500 futures were up 0.3%, and Nasdaq futures were up 0.5%.

On Friday, the Bureau of Labor Statistics will publish the March employment report. Economists expect growth of 180,000 nonfarm payrolls compared with a 275,000 gain in February. Before that, the Job Openings and Labor Turnover Survey on Tuesday is expected to show 8.7 million job openings on the last business day of February, down by 163,000.

Original Post

1. Big picture: demographics. Link here.

2. My favorite chart, link here. $6 trillion? $7 trillion?

3. US economy on fire:

• relative to history
• relative to rest of global economies

4. US energy: not one other nation in the world comes close

• crude oil: the US has produced more crude oil than any other country at any time for the past six consecutive YEARS, link here.
• natural gas: US #1 exporter (we may drop to #2 or #3 if Biden administration slows exports; however, SecDOE says "permit pause will be in rear-view mirror by this time next year")
• renewable energy
• electric grid: will have to expand exponentially to keep up with data center buildout (ND will be huge beneficiary)

5. Technology: not one other nation in the world comes close, and the Biden administration is showering the industry with incentives: CHIPS Act (and now there is talk of more — Intel says more is needed)

6. Agriculture: America remains the breadbasket of the world and production will increase significantly with DE and AI.

7. Jobs: "everybody" has a job, and wages are going up (folks debate this, but wages certainly are not going down).

• unemployment rates at historic lows

8. Consumer spending: February's numbers "blew everyone away" when announced two days ago on CNBC, March 29, 2024. Almost twice inflation rate. 

9. GDP, actual and estimate:

• GDPNow, estimate 1Q24: 2.3%
• Commerce Dept:
• 4Q23, third estimate: 3.4% -- despite massive efforts by Fed to slow the economy
  
• 3Q23: actual, 4.9%

10. Investors: no risk, no thinking, no expertise

• simply put money in MMFs and earn 5%; what could be easier?
• even a cave man could do it
  
• a spouse with $1 million can earn $4,000 / month
• and most of that interest simply goes back into the MMFs
  
• and, oh by the way, the Biden administration increased social security benefits for CY2024
• and many of those spouses with high net worth are seniors collecting social security
  

11. Southern surge: a $7 trillion gift. 

12. Military hardware.

• US Navy, submarines: we'll do the numbers later, but watching NCAA now.
• US Air Force, fighters and drones: we'll do the numbers later, but watching NCAA now.

13. Presidential election year. 

14. Inflation: and the number one topic on CNBC tomorrow will be ... drum roll ... inflation.

• production inflation? Nope -- most sectors experiencing disinflationary environment (link here)
• exhibit A: price of EVs plummeting
• risk: deflation for some sectors
  
• services inflation? still on an upward trajectory but slowing

 ****************************
Sunday Night Numbers

WTI: down slightly; fluctuating; trading now at $83.10.

• the sweet spot: $60 - $80
• $83? Oil bulls will take it

Markets: