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Weekly Economic and Stock Market Commentary – April 3, 2023


Note 1: The US investment markets, and my office, will be closed Friday, April 7th for Good Friday. Normal operations resume Monday, April 10th.

Note 2: If you plan on making an IRA contribution for 2022, PLEASE LET ME KNOW IMMEDIATELY. The contribution deadline is coming soon!

As for the stock market specifically:

The markets finished the first quarter by having another good week. Judging by the start this week, it appears to be real buying momentum instead of the end-of-the-quarter window dressing.

The movement last week was sufficient to move the NYSE and Optionable bullish percent indicators back to offense. The OTC indicator moved up, but is a long way from being on offense. Bear in mind that US stocks still rank in 4th place out of 6 spots in my macro asset categories. The nature of the evidence has us with WEALTH ACCUMULATION for NYSE stocks, and WEALTH PRESERVATION for the NASDAQ.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of March 31, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note

For some strange reason, no economic reports made it to my inbox last week.

The bad news is that I have enough fodder from “one of our friends in Washington.”

I won’t name the person, but will say that person is a senator on the Senate Banking Committee.

This senator said there should be a law that would claw back compensation from bank (I am sure it will be extended to other industries in the future) executives whose banks failed. There is no question that executives at the recently failed banks didn’t do their jobs effectively, but I am unsure if they did the jobs illegally, or even negligently.

However, the senator may have a point about clawing back compensation for people who didn’t do their jobs to the satisfaction of their customers.

Perhaps the good senator will find tremendous support for the claw back regimen should it include others who didn’t do as well as the American public would like.

Speaking specifically of the bank failures in the news over the past few weeks, at least four levels of state and federal regulators missed the problems. At the federal level, the Department of Treasury, the Office of the Comptroller of Currency, and the Federal Reserve all had oversight responsibilities. So, let’s get some of their pay back, too.

The Dodd-Frank law of 2010 was supposed to end the “too big to fail” bank model. This particular senator voted for that bill at that time. Do we take back the pay of those who voted for the bill? Do we take away the compensation of the President who signed the bill?

Bank failures, like stocks that go to zero, have been around for quite a long time. These failures continue to occur despite the growing regulatory apparatus our “friends in Washington” devise.

I concluded long ago that one purpose of our federal civil service is to supply a never ending parade of GS-15s from various cities across the nation to be called to Washington for the sake of our elected officials to publicly (i.e. hearings) yell at them for not doing the job properly.

That senator, as well as those who believe similarly, ought to be more thoughtful in their legislative efforts, as their efforts tend to lead to larger inputs of taxpayer dollars after their previous “really bright ideas” went sour.

Last week brought about a development in international finance I am confident “our friends in Washington” hadn’t planned over the past 75 years – nations would conduct trade in currency other than dollars. Perhaps the senator’s idea would claw back compensation from the descendants of the Truman’s, Eisenhower’s, Kennedy’s, Johnson’s, Nixon’s, and Ford’s, etc., as well as the panoply of senators, and Congressional representatives?

Their collective decision making gave us the circumstances that permitted Brazil and China to make a deal to trade in yuan, and not the dollar. China also is seeking to trade oil with OPEC in yuan vs. dollar also.

The senator ought to consider his words more wisely, as I am confident the mob will go after his compensation for the bad results of the voting record.

If you have any questions about this, or your portfolio, please feel free to call me.