A week and a few earnings reports, reactions, and economic numbers later, there appears to be at least a little more clarity. Though there's far from consensus, the indications are for a slowing U.S. and global economy over the upcoming six to 18 months.
Nvidia's earnings report and forward projections, although positive, failed to satisfy the hunger of analysts who are eyeing what they believe may be a peak in AI-related infrastructure spending. While there will continue to be sufficient demand for Nvidia's chipsets and related gear, it's not growing at a fast-enough pace to justify the sky-high price of the company's shares. Thus, the morning after Nvidia's fourth quarter and full year release, the sell buttons got pushed, hard, sending shares down eight percent on Thursday with a knee-jerk buy-the-dip reaction Friday, along with the rest of the battered and beaten NASDAQ.
On Thursday, the second estimate of 2024 4th quarter GDP was released, revealing the economy grew at 2.3%, in line with expectations and revised slightly higher (less than 0.1%) than the first estimate. With inflation still running at 2.5% or better, this is not an inspiring number. Further, the Atlanta Fed's GDPNow tracker was stunningly revised from 2.3% to -1.5%. The researchers cited the contribution of net exports to first-quarter real GDP growth falling from -0.41 percentage points to -3.70 percentage points while the nowcast of first-quarter real personal consumption expenditures growth fell from 2.3 percent to 1.3 percent.
Though the Atlanta Fed's projections are sometimes off the mark, they are usually close to reality and remain closely-watched indicators. If the 1st quarter comes in at a negative number, as they are forecasting, that would signal a recession, at least the beginning of one. Some commentators believe the U.S. entered a recession in 2024, some say it's even worse, in the belief that economic data was widely skewed to the positive for political reasons throughout 2024. Adding to the argument that the economy is being squeezed is the housing correction and mini-recession underway in the Washington D.C. metro area, thanks to Elon Musk's DOGE and President Trump's commitment to eliminate fraud, waste, and abuse in the federal government. Eliminating half a million to one million government jobs and possibly just as many in government contractors is bound to have a chilling effect on the entire area and spread to other parts of the country as a domino effect.
Alongside the layoffs and firings at the federal level, the Trump administration's efforts to identify and deport illegal aliens will also contribute to a slowdown in consumer spending. A country can't simply lose a couple million people without it having some negative effect, and that condition is more or less nationwide, though the hardest hit will be border states like Texas, Arizona, Florida, California, and New Mexico.
It won't end there however. Over the past four years, illegals have poured into states that either identify as "sanctuaries" or have Democrat or liberal Republican governors, or both. New York, Illinois, Colorado, Nevada, and others harbor high numbers of illegals. The process of rounding up and removing illegals is an ongoing effort that will take years and result in a drop in population overall, but, eventually will be a net positive. Before that, though, there will be a good deal of pain spread around.
The January PCE index released on Friday was positive in terms of inflation, though the argument has already shifted from fighting inflation to fighting dis-inflation or deflation in terms of the economy contracting. The Fed's two-plus years of diddling around the edges while inflation roared to as high as nine percent have had some effect, but other factors, especially unemployment and lower fuel prices, will make inflation disappear at a much faster pace than any Fed rate hikes could possibly hope to achieve. The Fed won't have to raise rates, as some fear they might. Instead, worry should be over whether the Fed will embark upon rate cuts as the economy stumbles into recession.
January durable goods orders minus transportation (mostly Boeing) were flat and up just 1.6% on an annualized basis. Consumer confidence, per the Conference Board, fell sharply in the latest survey.
Among the more useful indicators could be the Dow Jones Transportation Average, which was down seven consecutive sessions until Friday's 223-point gain left it just below its 200-day moving average. At week's end, the Transports were up 0.57 year-to-date, the Dow up 3.05%, S&P up 1.24%, and the NASDAQ down 2.40%.
Real economic conditions are beginning to come into better focus.
Stocks
The NASDAQ got buried this past week, down 3.47%, despite the reaction rally on Friday. The Dow and NYSE Composite were winners, the S&P lost just less than one percent, but there was structural damage with intraday lows at the worst levels in six weeks on the Dow and S&P. The NASDAQ barely escaped falling into correction, the lows at levels not seen since mid-November (3 1/2 months) and the index sitting just above its 200-day moving average.
Stock investors are worried about tariffs and the effects of government downsizing and deportations. Short term, none of these are positive for the general economy. Consumer credit is also a worry not being given enough attention. Consumer spending leveled off during the holidays and hasn't shown any potential for recovery. Housing is overdue for a correction and the recession that was politically forbidden under the Biden administration will bloom fully under no-nonsense Trump.
Tech stocks are exhibiting weakness and capital flight. Advisors are recommending energy, utilities, and various other safety plays. Conditions, which have been changing day-to-day, are causing severe choppiness, but a gradual tendency to the downside overall. The weeks ahead will be dominated by questions of how long and how deep the recession will be, once it arrives (it may already have begun). With the White House dominating the media, those voices cryng for Fed rate cuts are being drowned out. The word "stimulus" may become more commonplace, but the general attitude from the Trump administration is that everybody will share the pain and bailouts are not a solution.
Full year and fourth quarter earnings reports are slowing to a trickle, but some big retailers announce this week:
Monday: (before open) Sunnova (NOVA), TG Theraputics (TGTX); (after close) Emergent Biosolutions (EBS), Nuscale (SMR), GitLab (GTLB)
Tuesday: (before open) AutoZone (AZO), Target (TGT), Best Buy (BBY); (after close) Ross Stores (ROST), Nordstrom (JWN), Crowdstrike (CRWD)
Wednesday: (before open) FootLocker (FL), Abercrombie & Fitch (ANF; (after close) Lending Tree (TREE), Victoria's Secret (VSCO)
Thursday: (before open) JD.com (JD), Kroger (KR), BJ's Wholesale (BJ), Cracker Barrel (CBRL), Burlington (BURL); (after close) Gap Inc (GAP), Hewlett Packard Enterprise (HPE), Costco (COST), Broadcom (AVGO)
Friday: (before open) Algonquin (AQN), Genesco (GCO), .
The week ahead begins with ISM purchasing Managers Report on Monday and ends with Friday's February Non-farm payroll data. There's some chance that the NFP number will be a negative one with most estimates figuring a slowdown from January's 143,000 to possibly a range of 50-75,000. In between, ADP will set out February private payroll data on Wednesday with possible hints toward the "official" BLS figure and Challenger, Gray, and Christmas puts out its February hiring data.
Treasury Yield Curve Rates
| Date | 1 Mo | 1.5 mo | 2 Mo | 3 Mo | 4 Mo | 6 Mo | 1 Yr |
| 01/24/2025 | 4.45 | N/A | 4.36 | 4.35 | 4.32 | 4.25 | 4.17 |
| 01/31/2025 | 4.37 | N/A | 4.37 | 4.31 | 4.33 | 4.28 | 4.17 |
| 02/07/2025 | 4.37 | N/A | 4.38 | 4.35 | 4.37 | 4.30 | 4.25 |
| 02/14/2025 | 4.37 | N/A | 4.38 | 4.34 | 4.35 | 4.32 | 4.23 |
| 02/21/2025 | 4.36 | N/A | 4.38 | 4.32 | 4.34 | 4.30 | 4.15 |
| 02/28/2025 | 4.38 | 4.37 | 4.38 | 4.32 | 4.32 | 4.25 | 4.08 |
| Date | 2 Yr | 3 Yr | 5 Yr | 7 Yr | 10 Yr | 20 Yr | 30 Yr |
| 01/24/2025 | 4.27 | 4.33 | 4.43 | 4.53 | 4.63 | 4.91 | 4.85 |
| 01/31/2025 | 4.22 | 4.27 | 4.36 | 4.47 | 4.58 | 4.88 | 4.83 |
| 02/07/2025 | 4.29 | 4.31 | 4.34 | 4.42 | 4.49 | 4.75 | 4.69 |
| 02/14/2025 | 4.26 | 4.26 | 4.33 | 4.41 | 4.47 | 4.75 | 4.69 |
| 02/21/2025 | 4.19 | 4.19 | 4.26 | 4.35 | 4.42 | 4.69 | 4.67 |
| 02/28/2025 | 3.99 | 3.99 | 4.03 | 4.14 | 4.24 | 4.55 | 4.51 |
The 6-week bill has been added to the treasury stack this week. There's not much difference in yield between it and 1-and-2-month bills, so no surprise there. Yields on everything after the 4-month bill fell this week as money managers fled to the safety of fixed income.
The biggest moves were at the furthest out, as the yield on the 30-year fell 16 basis points to 4.51%. The 10-year dropped even more, 18 basis points, to a low of 4.24, the lowest since December, but hardly significant. The two-year dropped below 4.00% for the first time since October though the entire structure remains historically flat, suggesting stagnating conditions, also not surprising.
The spread on 2s-10s was slightly elevated by two basis points to +25. Full Spectrum returned was flattened from +31 to +13, narrowest since the dis-inversion mid-December.
When borrowing costs at any duration is one to two percent above the inflation rate, something's got to give and it's probably going to be manifested in lower rates across the board as inflation becomes dis-inflation and probably deflation. Money is about to get tight.
Spreads:
2s-10s
9/15/2023: -69
9/22/2023: -66
9/29/2023: -44
10/06/2023: -30
10/13/2023: -41
10/20/2023: -14
10/27/2023: -15
11/03/2023: -26
11/10/2023: -43
11/17/2023: -44
11/24/2023: -45
12/01/2023: -34
12/08/2023: -48
12/15/2023: -53
12/22/2023: -41
12/29/2023: -35
1/5/2024: -35
1/12/2024: -18
1/19/2024: -24
1/26/2024: -19
2/2/2024: -33
2/9: -31
2/16: -34
2/23: -41
3/1: -35
3/8: -39
3/15: -41
3/22: -37
3/28: -39
4/5: -34
4/12: -38
4/19: -35
4/26: -29
5/3: -31
5/10: -37
5/17: -39
5/24: -47
5/31: -38
6/7: -44
6/14: -47
6/21: -45
6/28: -35
7/5: -32
7/12: -27
7/19: -24
7/26: -16
8/2: -08
8/9: -11
8/16: -17
8/23: -09
8/30: 00
9/6: +06
9/13: +09
9/20: +18
9/27: +20
10/4: +5
10/11: +13
10/18: +13
10/25: +14
11/1: +16
11/8: +5
11/15: +12
11/22: +4
11/29: +5
12/6: +5
12/13: +15
12/20: +22
12/27: +31
1/3: +32
1/10: +37
1/17: +34
1/24: +36
1/31: +36
2/7: +20
2/14: +21
2/21: +23
2/28: +25
Full Spectrum (30-days - 30-years)
9/15/2023: -109
9/22/2023: -99
9/29/2023: -82
10/06/2023: -64
10/13/2023: -82
10/20/2023: -47
10/27/2023: -54
11/03/2023: -76
11/10/2023: -80
11/17/2023: -93
11/24/2023: -95
12/01/2023: -105
12/08/2023: -123
12/15/2023: -154
12/22/2023: -149
12/29/2023: -157
1/5/2024: -133
1/12/2024: -135
1/19/2024: -118
1/26/2024: -116
2/2/2024: -127
2/9: -117
2/16: -103
2/23: -112
3/1: -121
3/8: -125
3/15: -109
3/22: -112
3/28: -115
4/5: -93
4/12: -87
4/19: -77
4/26: -70
5/3: -85
5/10: -87
5/17: -94
5/24: -99
5/31: -83
6/7: -92
6/14: -113
6/21: -103
6/28: -96
7/5: -101
7/12: -108
7/19: -103
7/26: -104
8/2: -143
8/9: -131
8/16: -138
8/23: -141
8/30: -121
9/6: -125
9/13: -117
9/20: -80
9/27: -80
10/4: -75
10/11: -58
10/18: -54
10/25: -38
11/1: -18
11/8: -23
11/15: -10
11/22: -12
11/29: -40
12/6: -23
12/13: +18
12/20: +29
12/27: +38
1/3: +38
1/10: +54
1/17: +41
1/24: +40
1/31: +36
2/7: +32
2/14: +32
2/21: +31
2/28: +13
Oil/Gas
WTI crude oil prices continue to fall, from $77.37 at the New York close on January 17, to $74.60 on January 24, to $73.81 on January 31, to $71.06 on February 7, $70.56 on February 14, $70.25 on February 21, and finally, down to $69.95 at the New York close this Friday. Six consecutive weeks of falling prices by a cumulative 10 percent should have convinced enough people that the price of oil is not going back up any time soon. But, there are stil bulls in the oil patch.
WTI bottomed out at $68.48 on Wednesday and made a mini-comeback late in the week. It may have a further rebound in the weeks ahead, but they will be temporary only as the price of energy meets "drill, baby, drill", oversupply and slack to falling demand.
Gasbuddy.com is reporting the national average for a gallon of unleaded regular gas at the pump has begun falling at a faster pace, manifesting the lag time between the oil price and that of refined product. This week it's down to $3.06, from $3.13 a gallon last Sunday morning. The price of gas nationwide should continue falling for the next four to six weeks, longer if oil prices continue to slide, which they should.
California remains on top, though down a nickel from last week, at $4.75.
Pennsylvania fell four cents, to $3.31, the Keystone State remaining the longtime price leader in the Northeast. New York is a distant second at $3.13, followed closely by Vermont, $3.14. Connecticut ($3.06) and Massachusetts ($2.99) saw small price drops. Maryland is back down to $2.97. New Jersey is at $3.01.
Illinois was down five cents, to $3.18. Ohio ($2.76) and Indiana ($2.83) were down the most in the Midwest over the past two weeks.
Texas ($2.59) overtook Mississippi ($2.62) as the lowest in the country, just slightly better than Oklahoma ($2.63) this week. Louisiana is at $2.66; South Carolina, $2.68, followed by Kentucky ($2.70), Arkansas ($2.72), and Alabama ($2.73) Tennessee ($2.74), and North Carolina ($2.75). Georgia ($2.92) and Florida ($3.06) completes the low-cost SouthEast region. Kansas, Missouri, Nebraska, and Iowa range from $2.80 to $2.88.
Sub-$3.00 gas can now be found in three more states than last week. At least 29 U.S. states have prices under $3.00.
The West continues to suffer the highest prices in the country. Arizona ($3.40) was off just a penny. Oregon dropped a mere one cent, at $3.73, while Nevada dropped five, down to $3.77. Washington was stable at $4.12, joining California in the tiny club of mainland states at $4.00 or higher. Utah ($3.00) was down, and Idaho ($3.13) fell five cents.
Bitcoin
This week: $94,335.26
Last week: $95,900.56
2 weeks ago: $97,022.45
6 months ago: $59,123.20
One year ago: $63,043.77
Five years ago: $8,902.84
Bitcoin has not been over $100,00 since February 4 and this week got taken to the cleaners, dropping below $80,000 for the first time since early November. However, Sunday morning, out of the blue, the crypto-clip joint saw to it that the price would rise nearly $10,000 in less than three hours. If you bought bitcoin at 5 or 6:00 am ET at $85,500 or $86,000, gold mine! Instant profit, all because the President spoke glowingly about crypto on Truth Social and announced a Crypto Summit at the White House, scheduled for Friday, March 7.
Will it last? Probably not, unless BlackRock wants it to stay up there or go higher. Such a clown show, which is why all talk about a bitcoin strategic reserve should be disregarded as fluff. With price fluctuations like these, bitcoin can never be a reliable store of wealth unless the human race intakes copious amounts of stupid injections. Maybe they already have.
Precious Metals
Gold:Silver Ratio: 91.23; last week: 89.84
Per COMEX continuous contracts:
Gold price 2/2: $2,809.30
Gold price 2/9: $2,886.10
Gold price 2/16: $2,893.70
Gold price 2/23: $2,949.60
Gold price 3/2: $2,867.30
Silver price 2/2: $32.24
Silver price 2/9: $32.19
Silver price 2/16: $32.65
Silver price 2/23: $32.83
Silver price 3/2: $31.43
Gold and silver took some corrective medicine, if only because they had been out-performing stocks (and still are). Even after last week's blood-letting, gold is up 8.57%, silver ahead 7.49% year-to-date.
As performance metrics go, it's probably going to get better for precious metals as compared to stocks. Everything may go down, but PMs will go down less. This could be an opportune time to nibble a little. Prices may go back up just as easily as they could decline. However, those who think gold is a bargain under $2,900, might want to check out the gold:silver ratio of 91.23. Don't just sit there, buy more silver!
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping):
| Item/Price | Low | High | Average | Median |
| 1 oz silver coin: | 34.56 | 49.00 | 41.17 | 40.14 |
| 1 oz silver bar: | 37.50 | 49.00 | 41.86 | 40.44 |
| 1 oz gold coin: | 2,912.54 | 3,099.40 | 3,017.20 | 3,034.81 |
| 1 oz gold bar: | 2,900.00 | 3,034.40 | 2,993.59 | 2,997.82 |
The Single Ounce Silver Market Price Benchmark (SOSMPB) was relatively stable over the course of the week, posting $40.90 on Sunday morning, a drop of 14 cents from the February 23 price of $41.04 per troy ounce.
WEEKEND WRAP
After the White House spat with the little dictator (Zelenskyy) on Friday, DOGE continuing to slash and burn, the House putting up a bloated budget outline, first quarter GDP estimates signaling recession, and stocks taking some big dives, has the White House shown any fiscal discipline? Not yet.
Waiting an hoping is not a strategy. Trump is walking a tightrope.
At the Close, Friday, February 21, 2025:
Dow: 43,840.91, +601.41 (+1.39%)
NASDAQ: 18,847.28, +302.86 (+1.63%)
S&P 500: 5,954.50, +92.93 (+1.59%)
NYSE Composite: 20,028.19, +220.04 (+1.11%)
For the Week:
Dow: +412.89 (+0.95%)
NASDAQ: -676.73 (-3.47%)
S&P 500: -58.63 (-0.98%)
NYSE Composite: +146.65 (+0.74%)
Dow Transports: -47.87 (-0.30%)
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