Buzz on Business for Tuesday, January 23^rd, 2024.

The Dow closes above 38,000 for the first time ever. Bitcoin closes below 40,000 for the first time since November. And the Buzz on Business Podcast celebrates the publication of its eighty-sixth episode!

What?

Stock Market Report

A good day for stocks on so-so volume and a pretty good day for bonds on Monday.

• The Dow Jones Industrials passed another milestone. It closed at 38,002, up 38 points or four-tenths of a percent of a percent.
• The S&P 500 was up eleven points. That’s a gain of two-tenths of a percent, and it closed at 4,850.
• The Nasdaq Composite gained three-tenths of a percent. It closed at 15,360, up 49 points.
• The RSP was up a half percent. The SOXL managed a 1.15% gain on the session.

Bond Market Report

Rates were mostly lower.

• The 2-year treasury closed at 4.391%, that’s off two basis points.
• The yield on the 20-year was off four ticks, and it now yields 4.445%

Oil, Gold, and Bitcoin

• Oil was up $1.18 and maybe, just maybe is breaking out of the trading range it’s been in for the better part of a month. It closed at $74.57.
• Gold was off $6.60 and closed at $2,022.70.
• Bitcoin had a rough day, and the chart looks bad. This is a bit surprising, given all the new Bitcoin funds that have started trading and that presumably have been buying. I suspect that the old adage, “Buy the rumor. Sell the news,” is in full effect. It closed at $39,850, off $1,746. Bitcoin trades 24/7 and the price was changing as we speak, so if you saw or heard a different number, that’s why!

PCE Takes Center Stage: Gauging Inflation on Friday

Not much news on Monday, although it is shaping up to be a busy news week this week. The PCE, the Personal Consumption Index complex, which is the Fed’s favorite measure of inflation, is released on Friday. Expectations are for a 0.20% increase in the cost of living in December.

Thursday, jobless claims and some housing market data will be released. And we also get some data from the Manufacturing sector.

ISM Index: Tracking Trends, Not Predicting the Future

Speaking of manufacturing, we’ve reported several times on the weakness in manufacturing over the last two years.

So, a story caught our eye on Monday on some recession indicator that has a perfect track record over seventy-two years. A PERFECT track record!

The story was published by an outfit that calls themselves The Motley Fool. Have you heard of these people? Lucky you.

So, the headline was on one of those carousels designed to disappear before you have a chance to click on it, so I had to do a search of Motley Fool and Recession. The search results: literally dozens of foolproof recession indicators. I found myself getting nauseous, but I pressed on. I pressed on for our readers.

Apparently, people must click on any headline with the word recession in it.

First of all, there are no foolproof, predictive recession indicators. The closest is New Home Sales. We did a podcast episode on that very subject last month.

The ISM Manufacturing New Orders Index, the indicator they claimed was foolproof, is, indeed, well correlated with recessions. That makes sense. Manufacturing and new orders, and recessions go together. By the way, ISM stands for the Institute for Supply Management.

Industrial Production has been in contraction mode for almost two years. The ISM Index has been below 50, indicating that manufacturing is contracting and supposedly signaling a recession.

Here’s the thing. A recession is coming. I don’t know when. Neither does the Motley Fool. It might be this year. It might be ten years from now. I’d say, both are equally likely. Or unlikely, if you like!

Every recession since there has been an ISM Index has seen it fall below 50 at one point or another. Every single one.

But this supposedly foolproof recession indicator has, right on the chart they posted in their article, flashed at least ten false positives.

And the economy is still emerging from the wildly disruptive pandemic lockdowns and the supply chain issues that went along with it. Isn’t it at least possible that

I’m not saying there is no recession coming this year. The Motley Fool could very well be correct on that score. I’m saying the issue is complex and that there is no foolproof recession indicator.

You want foolproof? Do you want foolproof?

Then please don’t read the Motley Fool.