Macro Economic Decisions for the week March 1st to 5th, 2021

Leaving the last post with the possibility of a retracement in the S&P500 I will now take a look at the Macro Economics. The IMS is coming out next week and will play a roll further down the road in 3-6 months. I do not expect major changes in the numbers. ISM determines the S&P500 within 3-6 months and the S&P500 is a leading indicator for the GDP 3- 6 months further down the road. Thus, we are covered for the big picture. Looking back 3-6 months.

ISM, manufacturing sector it all looks pretty much like recovering.

Since AUG to NOV 2020, the economy is recovering in numbers. I dont expect the numbers to change a lot when FEB numbers coming out next week. Production Orders are picking up and so is production. The delivery shortages are prone for employment increase. companies need more drivers and trucks on the road!

Employment numbers are usually 6-12 months lagging and I expect them to rise with the Non-Farming Payroll release data. But companies are hiring! Prices rise when demand is rising. This is also a good sign of recovery. Export and Import are also improving. These numbers painting the picture of the current market.

The Building Permits.

Building Permits raise some concerns IMO. The new numbers in January show a huge jump of about 10.34% compared to December. The increase is steep! While the authorized permits drastically increased the completions are down. I hope that will balance it. We will see in a month or two from now.

For now I can say Building Supply chains and construction will be up in Spring and summer. And with it come home outfitters and banks. They will do well!

GDP and S&P500

We see an constant rise of the S&P500, 4th column in, as well a slight dip in the GDP production in Q4 2020, 6th column in. If the S&P500 rises and the GDP falls the market becomes unpredictable and positions should be closed or moved. This only happened 8% of the time since 1954. The new numbers come out in April. Still far out.

China PMI Index

What we see is that China had a peak in November 2020 and the orders are declining since. The red line is the AUD-X measured in USD. It is still up but I expect it to turn. Companies that doing huge amount of business with China are getting ready to be shorted. They are losing business. Australia's export is depending hugely on China. So when the Chinese slow down the AUD will fall. Take my word and remind me in a few weeks.

This is the reason for slow down and fall of the AUD by 4.5%. Here is something to watch out for. Opportunities coming along the way.

There is nothing that shows a further decline or huge impact on the world economy. And when the US economy is doing well the world is doing well, too

So lets take a look at the trades from last week and what it means for the coming week.