Good Thursday afternoon. The US economy continued growing in Q1, albeit at a slower pace, as inflationary concerns push back rate cut hopes into Q4.  GDP grew at a 1.6%  annual rate in Q1. This lagged the 2.4% growth rate projected by economists. This mornings report also showed that inflation was higher than expected. Excluding food and energy prices, the PCE (personal consumption expenditures index) rose by 3.7% in Q1, which was above expectations of a 3.4% increase.

On the news, US markets initially fell sharply, while rates rose. However, stocks are trying to make a comeback. The Dow Jones was more than 630 points lower this AM but as I write, the Dow Jones is down 400 points (.90%) while Nasdaq is lower by just .70%, with the 10 year yield trading at 4.7%. 

Importantly, even as Nasdaq is lower on the day, the semis have been higher throughout today’s trading. VRA Buy Rec SOXL (3 x Semi ETF) is now up 6% on the day. We see this as a tell…the semis lead and the market follows....