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Is Main Street Telling Us More than Wall Street?

Main Street vs. Wall Street

Signals Matters News Letter: The Signals THAT Matter

Broadly, the core and timeless principles behind the infrastructure of Signals Matter Portfolio Construction are carefully discussed here and here.


Main Street vs. Wall Street

The Latest US Bond Signals:

Yields are falling off as central banks around the world seem to be pausing their “hawkish” stance in the fear of a looming but currently downplayed recession. But it’s not only the central banks which are pausing, but US business activity as well—in fact at a pace we haven’t seen in over half a year, prompting investors to wonder which matters most: What the NBER says about a recession or what businesses are seeing with their own two eyes on Main Street. As expected, markets are now waiting to hear what Powell says from Jackson Hole, as the Fed IS the market in this post-08-distorted version of so-called “capitalism.” As US money supply sinks below the zero range (thanks to Fed bond-dumping), it’s fairly clear to market veterans that a harder landing is ahead, despite Fed-speak to the contrary.

The Latest US Stock Signals:

Distorted markets run on liquidity and Fed accommodation, so one must ask how stocks are poised to behave as money supply shrinks and the Fed pretends to fight inflation with a higher-for-longer rate meme. As of late, stocks have been climbing on the hopes that further rate hikes are unlikely (agreed) and even a pivot to cutting is on the horizon (more likely in 2024?). Credit markets drive stock markets, and the near-term hope is that further Fed tightening is at an end and hence equities are poised for a central bank tailwind. That may be wish-full thinking as M2 supplies (and hence liquidity and credit) tighten here and abroad. In the end, less liquidity means less stock support, so the recent moves upward are anything but credible or sustainable into year-end. Hope, rather than facts, are currently driving stock markets.


Other Key Market Signals:

Needless to say, the headlines and central bankers are still obsessed with their inflation metrics, which are anything but clear. The alleged “victory” on inflation reduction still seems premature as we head toward higher energy prices and a wide/divergent range of price metrics depending on US zip codes, as Florida reports much higher costs than Minesota. Ultimately, geopolitics and bond markets will determine the inflationary end-game, not Powell. Of course, the Fed’s “data dependence” remains dubious, when the “data” itself is entirely fictional/manipulated. This may explain why GDP estimates are rising by 0.3%, but that’s hardly enough growth to counter-act twin budget deficits and a US public debt inching toward $33 trillion…

Meanwhile, the BRICS are meeting now in South Africa and there’s still no sign of an alternative, gold-backed currency…As negative as we are on the USD, our prior reports confirm that we were never holding our breath for such an over-night game-changer.

Main Street vs. Wall Street

Macro Thoughts & Gold: board member and Gold-Switzerland/Matterhorn Asset Management, AG Partner, Matthew Piepenburg, shares his latest insights on the growing stress from the bottom-up in Main Street indicators here:

When Baseballs & Guitars Say More than Pundits

Even More

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