In Case You Missed It: Key Charts of the Week:

By Mark Masterson on March 7, 2025

It has been said “a picture is worth a thousand words.”

In a notable release on Friday, the Atlanta Fed now predicts GDP will be negative in Q1….

• The Atlanta Fed’s GDPNow estimate for Q1 2025 US GDP growth has dropped from +3.9% to -1.5% in 3 weeks.
• This means the Atlanta Fed now sees the US economy shrinking in Q1 2025.

Atlanta Fed 2 29 25

Just one chart…..the most important.

The dollar is rolling over hard this morning, which suggests it will now make a move deeper into the channel.

This should help risk assets this month.

With sentiment getting pretty negative last month, we see the S&P 500 also reached oversold.

I suspect it may bounce for a few weeks.  TBD.

What is going on at the Atlanta Fed.

Their GDP Now forecast just fell off of a cliff. 

The Atlanta Fed’s GDPNow model now predicts that US GDP will shrink by 2.83% in Q1, a sharp drop from its previous estimate of -1.48% on Feb 28.

This forecast stands in stark contrast to the +2.2% growth expected by a Bloomberg survey of 61 economists.

Atlanta Fed 3 4 25

If the 2 year yield has anything to say about it – the Fed will cut rates at the next meeting.

Remember, the Fed always follows the direction of the 2 year yield.  Always.  Right now- it is falling hard.

Blue line is the Fed funds rate.  Black line is the 2 year yield.

Interesting chart showing President Trumps first term, and his second term.

It’s focus is tariffs, and the markets response to tariffs.  The white line is the market during the first term, and the red is today.

Analogs do not have to repeat, but this one suggests that a bounce is coming once President Trump pivots away from the tariffs.

Vanda Research 3 5 25

I will note that the market is not oversold enough to make a clear call that a bottom is in.

It is normal for the McClellan Oscillator to reach levels below -60 in a market correction.

Keeping an eye on this….

You can see that the Nasdaq has reached the 50 week moving average.  The red arrows show that in this uptrend, it has been the level at which the market has bounced.

Will it do so this time – or does the market need a more meaningful correction down to the 200 week moving average. (the blue circle)

Here is the daily view of the Nasdaw.  Blue arrow shows it has hit the 200 day moving average.  This is certainly a place where the market can bounce.

The US dollar is falling hard over the past few days……

It is slicing through the 200 day moving average (the red line) as you can see below.

A falling dollar should support commodities.

The CRB commodity index still looks like it wants to press higher after the long, sideways churn of the past two years.

Bond yields are also falling, much like the dollar……

This is the 10 year treasury yield.  It too has sliced right through the 200 day moving average.  It looks like Bessent is being impactful in pushing yields down – which helps bond prices.

But…..

Don’t forget the big picture as well.

The S&P 500 weekly chart shows that market is quite stretched above the 200 week moving average. (red line)

When it gets this stretched, it needs to correct.  That can happen two ways.  It can either move lower, or it can move sideways and allow the average to catch up.

The dollar is in free-fall……..

This analog is also interesting.  Perhaps it will play out – perhaps it won’t.  If it does repeat, that implies that Trump will pivot away from tariffs soon.

Barchart.com 3 7 25

Some big sellers lately…..Hedge Funds have dumped stocks over the last 2 weeks at the fastest pace in history

Barchart.com 3 7 25

Why is the dollar crashing?

Because the Euro is surging.

Dollar in blue, Euro in black…..

Remember – the dollar index is a basket of currencies – with the Euro being about 60% of it.  So, if the Euro is up, the dollar is down….