Well, Friday saw the release of the real PCE, my favorite of macroeconomic indicators and the one I feel leads all others down the road.? After revisions, the drop from the last release was pretty intense, from around 4% y/y to only 2% y/y.? This is like a bomb siren.? Rather than buying a new set of Gucci loafers, the consumer may be buying cement shoes for corporate profits.? I expect that the next set of quarterly numbers could begin to paint the next few months red in the equity markets.? And given the recent rally in stocks, the old adage of sell high comes to mind.

Think about all the interconnections that go into this.? Oil/gas demand could finally fall leading to lower prices in a commodity that isn’t in low supply to begin with.? Corporate profits will decline with less spending.? All of this would call for lower interest rates which means a lower dollar.? But the Fed might have a hard time lowering rates now without causing a crises due to the amount of government debt owned by foreign entities (lower rates makes our debt less attractive).? I wonder if Ben likes his new job.

You can draw connections all day long and get pretty tangled up.? The key is to find good value in all of this and exploit it, especially after any declines in asset prices in your favored vehicle.