DC Lite #302

In partnership with

1. Retail sales. "How bad was the miss? Well, it was nearly a 5 sigma event for control group retail sales based on the economists surveyed by Bloomberg."

2. US exceptionalism. "The US exceptionalism narrative is vulnerable. Strong US growth for 2025 is already the overwhelming consensus, which means continued robust US data will 'face diminishing returns', while weaker data will disproportionately hurt the dollar because of the skew in positioning."

3. GLD performance vs. flows. Retail investors have largely sat out the rally in gold: despite $GLD rallying more than 50% over the past two years, ETF flows over the period remain negative at -$2.6B.

4. SPX consolidation. "For the past three months, the S&P 500 has traded in a narrow ~6% range (5,825-6,118). These consolidation periods are rare (occur only 13% of the time going back to 1950). Sometimes they mark tops (2008, 2022). Other times big rallies ensue (1990s). Resolution is key."

5. Q4 margins. Eight sectors are reporting YoY increase in margins. The blended net profit margin for the index is 12.5%, well above the 5-year average of 11.6%.

This week in DC Lite:

Thu 2/13 #301: "Those PPI numbers were a game-changer for the January core PCE print"

Wed 2/12 #300: "There is a new S&P 500 CAPE ratio to consider" 

Tue 2/11 #299: "A flatter yield curve should benefit larger over smaller firms"

Mon 2/10 #298: "Year 3 of a bull market tends to be messy"