The news that initial jobless claims have spiked to 385K is a good time to bring up two big themes we’ve been talking about lately.
One is that people see the economy rolling over a bit.
The other is that people see market internals deteriorating.
First on the economy we wrote on Tuesday about fears of a “Spring Swoon.” Although Q1 numbers looked great, with GDP coming in as high as 3.5%, estimates for Q2 are already below 2% in many cases. In the last couple weeks there have been a fair number of downside economic surprises.
And then on the market there’s a lot of talk about market internals.
We wrote about this yesterday. Breadth is narrowing, small caps are underperforming large caps (a sign of investor nervousness), and transports and banks have been lagging sectors.
Markets are close to record highs, but fears related to both stocks and the economy are on the rise.