Our quants nailed Q3 GDP this morning – expecting 3.5% vs the wall streets estimates of 3.3%. Even more reason to believe we’re on the right track for this rate of change slowdown (or less good) in growth and inflation moving forward. The smartest trader of them all has already began to sniff this out – The Market itself. This GDP reading was up 17bps and +3.04% y/y – the fastest pace of growth in 3yrs and will likely conclude this historic run in growth at 9 consecutive quarters!
The USD is now immediate term overbought, and we’ll likely see a “hiccup” in the USD from here – still very much bullish trend – but a very crowded trade right here. This could be boon for Gold prices in the near-term, but I don’t want to get too far out in front as next weeks Unemployment data is likely to express more wage growth. Wage growth remains a classic late or peak cycle indicator as well.
Don’t confuse our near-term “bearishness” with doom and gloom for the US economy. We’re not calling for recession by any stretch, we’re simply calling for the data in Q4 thru Q1 2019 to look less attractive when comp’d y/y.
Good luck out there and as always, reach out for any further commentary.
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