What to know today

  • This will probably be a good month.
  • Bitcoin abides.
  • RIP Daniel Kahneman.
markets

What’s Not To Like About April

Even those showers bring flowers.

The S&P 500 Index has closed in the green at the end of every month from November forward.

It ended March at 5,245.35 and is up 9.969 percent so far in 2024.

That’s 10 percent to people who celebrate, and it means we have back-to-back double-digit up quarters for the first time in more than 10 years and only the sixth time in the last 50.

People who run money for a living and write about it on social media platforms are using terms like “greatest bull markets ever” to describe what’s happening.

And it’s only the first day of April, one of the best months for stocks, as this tidy display of information from Grant Hawkridge of All Star Charts demonstrates:

The average performance by day of the S&P 500 Index from 1950 through 2023.

What we have here, as Jeffrey Hirsch of The Stock Trader’s Almanac noted, is a secular bull market.

Up months in November, December, January, February, and March bode well for April and for the rest of the year… and for at least the next year.

The data show some second- and third-quarter weakness during what Hirsch has identified as the “Worst 6 Months” period. They also show some huge fourth-quarter rallies.

And they also show that the last months of the year have been up all 11 times we’ve seen a positive January-February-March run to open a year, with an average annual gain of 11.9 percent.

The performance of the S&P 500 after positive months in November, December, January, February, and March.

You will read (some of you more, some of you less) about how we’re on the verge of imminent collapse, of houses of cards, fiscal reckonings, and central bank sleight of hand.

Some of it will sound smart. The takeaway after separating wheat from chaff is that risk management is important and you should allocate your assets in a framework that allows you to sleep at night.

The reality is that the US economy continues to defy expectations.

Gross domestic product expanded at a faster annual rate than previously estimated in the fourth quarter,the Bureau of Economic Analysis said last week, growing by 3.4 percent versus a prior estimate of 3.2 percent.

And real domestic income grew by 4.8 percent.

This is the kind of thing you see when productivity is on the rise, like back in the mid- to late-1990s, GDP consistently beating to the upside on stronger output.

Perhaps we’ll hear more about this dynamic when Jerome Powell is back at the mic on Wednesday to share his economic outlook at the Stanford Business, Government, and Society Forum in California.

Welcome to April.

deep dive

Cryptocurrency Is Dead, Long Live Cryptocurrency

This ecosystem/market appears to have sustenance.

There was only one market open on Friday, when Personal Consumption Expenditure Price Index data for February came out and Federal Reserve Chair Jerome Powell spoke.

And there you have a use case for Bitcoin $BTC, made so well the day after perhaps the most notorious figure the ecosystem has produced learned he’ll be spending the next quarter century behind bars.

Participation in the price-chasing has expanded exponentially through the regulatory approval and introduction of spot BTC ETFs.

Sam Bankman-Fried in a courtroom sketch of his sentencing hearing on March 28.

Meanwhile, the Bureau of Economic Analysis said early on Friday that core PCE was cooler in February, 0.3 percent, than it was in January, 0.5 percent.

Still, consumer spending beat expectations on the biggest wage gain in more than a year.

And then the world’s No. 1 cryptocurrency sold off during Powell’s speech, an indication that that market took his remarks to be hawkish on inflation and interest rates.

Powell did say that the Fed can hold rates steady if inflation doesn’t cooperate and that he doesn’t think rates will return to pre-pandemic levels.

He also said that the economy isn’t suffering with rates at their present level and that there’s no reason to think we’re either in or on the edge of recession.

BTC slid toward $69,000 as the Fed chair spoke but has since recovered to north of $70,000 heading into Monday’s open.

SBF is heading to federal prison.

But crypto is minting millionaires again.

deep dive |
April 1, 2024

Cryptocurrency Is Dead, Long Live Cryptocurrency

BEHAVIORAL ECONOMICS

Investor, Know Thyself

Daniel Kahneman guided us past our own ignorance.

Amid a run like this, with the S&P 500 up each of the last five months, it’s natural to wonder when the crash is going to come.

Indeed, as Daniel Kahneman showed, that’s how we humans are wired. Our instinct to survive is the most basic and the most essential. But that’s not the end of the discussion.

Kahneman, a social psychologist who established the field of behavioral economics and won the Nobel Prize in 2002, passed away on March 27.

As Jason Zweig put it, “Daniel Kahneman explained investors to themselves.”

An infographic summary of Daniel Kahneman’s “Thinking Fast & Slow.”

His primary insight, gained through extensive experimentation and research, is that human beings are not the rational creatures we fancy ourselves to be.

Along with Amos Tversky, Kahneman in the 1970s and early 1980s demonstrated that, faced with uncertainty, we use systematic biases to make decisions.

“Our comforting conviction that the world makes sense rests on a secure foundation: Our almost unlimited ability to ignore our ignorance,” Kahneman writes in “Thinking, Fast and Slow.”

If you want to know yourself, reading Kahneman’s work is a good place to start.

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