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Tackle Today: U.S. Economy Grows by 3.3%

January 25, 2024

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«What does that mean for risk assets?»

Coach Mark here

The first look at the GDP numbers came in this morning and they were impressive. The U.S. Bureau of Economic Analysis reported that the U.S. economy grew by 3.3% in the final quarter of last year. This was significantly above expectations and at least for a day (or a morning) is resulting in economic sensitive sectors (such as small-caps) leading the charge providing a little more breadth to the bullish conditions than we had experienced over the last week.

What does a hot GDP print mean overall? What should we take from it? By its nature the GDP is a lagging indicator. It tells us what happened LAST quarter…not a look ahead to what is in the future. Still, it adds to a narrative that has been present for the last year. A resilient economy that does not want to break despite interest rates that have been higher than we have experienced in many, many years.

Tomorrow is the most important economic report of the week. The Core PCE Price Index comes out with important inflationary data. If that data comes in favorable it gives the bulls a short-term goldilocks narrative of a strong economy with falling inflation. However, if it comes in hot then we might be having another discussion. One involving higher yields, fewer rate cut expectations and a tougher backdrop for bulls.

Will break it all down on the Halftime Report today along with Tesla and many other companies earnings. Have a fantastic day!

Chart of the Day: 10-Year Treasury Index

This is a very important chart heading into the inflationary data tomorrow. It is in a “go or don’t go” type pattern and if we fail to break out here then it is very constructive more risk assets in general.

Today’s line up

Traders Lounge 11 AM EST

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Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only the coaches at Tackle Trading can deliver.

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