Swanson's Scorecard: Slow patch or recession?

After months of upward movement, US stocks markets have begun to struggle to keep pace.

The flow of economic data has not been helpful in this regard. We have not seen the kind of reassuring reports we were hoping for. US jobs numbers have been weak and durable goods orders have declined. Manufacturing indices in the United States, the eurozone and China dropped in March, perhaps foreshadowing worsening economic trends to come. And, last week the International Monetary Fund cut its global growth forecast for the year. What to make of all this?

All that glisters is not gold*

Gold tumbled last week in a price move suggestive of a disorderly, almost panic-like repricing of the commodity, which many of my readers know I like to categorize as a psychological asset.

To get at the root of gold’s collapse, we first need to examine why this precious metal has risen so far so fast, and why so many people have made money in this commodity for so many years. Indeed, the price of gold has risen sevenfold since 2001. Investors buy the metal as a safe haven from turmoil in the financial world. This is especially true when inflation threatens or crises occur. When banks totter on the brink of collapse or government deficits rise to dangerous levels, gold comes in handy.

The jobs growth is coming

The March US labor report elicited a giant moan of grief from Wall Street. The number of new jobs created was positive as payrolls grew by 88,000, but the growth was well below what experts had expected and the smallest gain in nine months. The news put quite a damper on any enthusiasm that growth would pick up in the second half of 2013.