All the data this week is making investors more fearful. Let’s break down each aspect so you understand what’s going on and what you can do with your portfolio.
Bitcoin & Crypto Market
Crypto has taken a serious hit over the past few weeks. Bitcoin’s down more than 25% from its January all-time high. It tanked over 20% in February alone!! Tariffs and economic uncertainty have put heavy pressure on crypto.
But as we’ve been saying, crypto is volatile. Unlike the stock market, these sharp moves are just part of the game. I’ve been thinking about picking up more Bitcoin below $80,000, you might want to consider doing the same. It already broke $100,000 and could hit $1M at some point in the future.
Also, big news—Trump announced the new Crypto Reserve coins. More details are coming out today, so I’ll cover that in next week’s update. If you want a teaser, check this out.
Inflation & Interest Rates
The latest Consumer Price Expenditure (CPE) report showed that prices rose 0.3% in January, right in line with expectations. Year-over-year inflation sits at 2.6%, which is still well above the Fed’s 2.0% target.
Translation? The Fed is unlikely to cut interest rates anytime soon. Duh, they shouldn’t!
Manufacturing Data
February’s PMI (Purchasing Managers’ Index) came in at 50.3, missing expectations and slipping from 50.9 in January. That alone wouldn’t be too concerning, but here’s where it gets troublesome:
- The price manufacturers pay for goods skyrocketed from 54.9 to 62.4—a massive jump, when this number typically moves by less than 1 point!
- Manufacturing jobs fell sharply, dropping from 50.3 in January to 47.6 in February—another big decline.
I’ve been spouting for months now that the data hasn’t been good. People are finally starting to see the cracks in the economy. That’s what all this market panic selling has been about. The day this report was released, the markets tanked.
ADP Jobs Report
February’s ADP report was, yet again, worrisome. The economy only added 77,000 jobs, which is far below the expected 140,000.
Digging deeper, the data raises more red flags:
- Key sectors lost jobs: trade, transportation, utilities, mining, education, health services, and information.
- The South and West regions reported job losses compared to January.
I think this is only the beginning of a bigger trend. We’ll know more when the JOLTS report comes out later today. Although, I don’t see how the data will be much different.
What This All Means
Between crypto’s volatility, sticky inflation, and weakening job & manufacturing data, oh and let’s not forget about tariffs, market investors are full of fear. History shows that we’re on the cusp of a recession.
My advice is to buckle up, because insane buying opportunities are on the horizon. I have a lot of dividends on DRIP, so we’re buying all the way down. Down markets are when exponential compounding of shares happens and you make mo money.
Want Market and Economic Updates Sent Right To Your Inbox?
We only post these updates when there’s a lot to talk about, but if want weekly economic updates, get on our free Investing IINsights email list. You’ll also get our portfolio updates and my top hand picked investment ideas.
