Mid-Week Macro (4/30/2025)

The stock market has been trending higher since the mid-month sell-off. The S&P closed today at 5569. I think this is a dead-cat bounce that won’t last much longer. I’ll be surprised if we don’t retest the recent 4850 cycle low in the near term. I say that because the macro data has been anemic, and the earnings necessary to maintain 5500 are a fantasy. The S&P would need 11% earnings growth with a PE of 21 to maintain 5500 in 2025.

When you look at the macro data, you see a University of Michigan consumer confidence number at 52. The lowest this century was 50 in 2008, and it was at 55 during COVID. The average in 2024 was over 70. The regional Fed districts have an average manufacturing index of -17. Sales volume of existing houses is at historic lows. Shipping volume from China is down 60%. Banks are rejecting 50% of new loan applications and 42% of mortgage refi applications. Over 50% of consumers are living paycheck-to-paycheck with no savings, and 74% are reporting financial stress. Plus, Q1 GDP was just reported as negative. And somehow, we are going to get 11% earnings growth? Laughing emoji.

Gold has maintained its strength, closing today at $3244. That is down $256 from a recent high, but is still up 24% for the year, whereas the S&P 500 is down for the year. Gold is clearly leading. Silver continues to lag at $32.36. I don’t expect silver to rip above $35 until the fear trade arrives. That could happen soon, once we get the next leg down on the S&P. Once the S&P is below 4800, the fear trade should ignite – unless we get a quick bounce. Once the S&P gets trapped below 5000, it’s only a matter of time before 4500 is taken out. I consider that the recession level. Wall Street is not expecting 4500, and it will ignite fear to a level not seen since 2008.

Gold might retest $3000 during the next leg down on the S&P, but I think it will hold. If it doesn’t, I would expect either $2900 or $2800 to hold. The good news is that any correction in gold will likely be short-lived. Gold is the new MAG7. You can want to buy any dip.