This is The Takeaway from today's Morning Brief, which you can receive in your inbox every Monday to Friday by 6:30 a.m. ET along with:
The chart of the day
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Economic data releases and earnings
It could be time to resurface use of the ‘R’ word in your financial lexicon.
No, not ‘R’ as in PE ratio. But ‘R’ as in recession, as in a contraction in economic growth.
I know what you are probably wondering. How is this guy going to pontificate about a recession following a month that created 236,000 headline jobs? How is this guy going to warn the investing masses about a recession when shares of Nvidia are up 85% year to date, followed not too closely behind by an 80% surge in Meta?
All of that is precisely why I am bringing up recession. Well, that and because economic data is beginning to soften.
April has brought with it rain showers, a miss on ISM manufacturing data, a miss on job openings data, and a miss on the ADP employment report. The GDPNow read on economic growth from the Atlanta Fed has also ticked lower.
“We are seeing cracks in the labor market,” John Hancock Investment Management Co-Chief Investment Strategist Emily Roland told me, Seana Smith, and Brad Smith moments after the jobs report on Yahoo Finance Live.
The aforementioned jobs increase for March was below the year-to-date average increase of 344,000, let’s keep in mind.
Roland thinks we are still likely to get a recession this year and acknowledges we are headed into a “tricky” part of the economic cycle.
Meanwhile, Samsung warned on Friday about a semiconductor glut. Several weeks ago, Micron offered up a similar vibe when it reported earnings.
Despite the fresh warnings, those aforementioned tech names – and even speculative AI names such as SoundHound — continue to push higher. Many investors are ignoring what looks to be a slowdown in the economy fueled in part by the Fed’s aggressive rate hikes (one more is on the way soon, RSM chief economist Joe Brusuelas tells us).
Not all investors are overlooking it, as seen in the strong moves in gold and silver prices, and utilities and consumer staples stocks. But enough are to call it out.
Bottom line: this is not an official recession call from Yahoo Finance, we don’t do that stuff. Besides, it’s damn near impossible to pick successful stocks and economic cycles. All I am asking is that you pay attention to the new messages the economy is throwing off – it will matter to your wealth, believe me.
Happy Trading!
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