J.D. DURKIN: Good morning, members, one and all. Mr. Bob Lang, the one and only, joins me now to talk the month in review, and of course, get you ready for what could be in store as we kick off April trading next week. There is no better place to start here of course, Bob, than today's PCE data. That is a favorite go to measure for the Central Bank. Core PCE coming in with a gain of 4.6%, slightly less than the expected 4.7. Talk to me about the impact on today's trade in you think, and perhaps even more importantly, how you think these numbers will be viewed by Chairman Powell and his colleagues at the Fed.
BOB LANG: You know, JD, today's results were mostly in line to slightly lower. However, on the headline number, 5%, and core PCE year-over-year, 4.6%. These numbers are just too hot for the Federal Reserve Open Market Committee. I think they're going to possibly, more likely, raise 25 basis points more because we do have to overcome the inflation. And if we do peak here say, 5%, and we stay there for quite a while and the Fed is not doing enough to squash the inflation, we're just going to have persistent 4.5 to 5% inflation for a long period of time.
So but at this point in rate hike cycle, I don't think the Fed is pleased with these readings, 5% on the headline, again, and 4.6 on the core, just too problematic. And even though the Fed fund's rate are right at these levels, remember, the Fed needs to overshoot this inflation as I mentioned before. And these numbers just do not push the numbers for inflation down strong enough. And services inflation, by the way, a little bit too hot on that segment of inflation too.
J.D. DURKIN: Bob, are there any particular S&P resistance levels to take note of?
BOB LANG: Yeah, this week was an important week for the action of the markets, the S&P 500 pushing above that 4,000 level for the first time in a while, and staying above there for the month would be very productive for the bulls. In fact, almost 2.5, 3% rise in the S&P 500 in the month of March. Almost 6% for the first quarter as well too. So I think likely finishing above that level and above the 50 day moving average, which we pushed above on Wednesday, is important for the bulls to keep this momentum going. It's been strong resistance for the past several weeks. NASDAQ also making a push above 13,000 as well too this week, JD. And if rates come down further, that'll be a sign that it's time to pick growth over value, and that'll be the place to be.
J.D. DURKIN: All right, fair enough. Thank you for that context. Now, volatility has been back in focus as investors continue to closely watch any headline concerning the banking sector, your close follower of the VIX. What has that been signaling to you, Bob?
BOB LANG: So the VIX has fallen sharply after a recent run up to 30% over of just a few weeks ago. And why did it run up to run up that high? It was driven mostly by the uncertainty over potential bank run, bank crisis, and so forth thanks to Silicon Valley Bank and a few others.
We don't see this materially being complete yet, or completely resolved. But volatility sellers, look, they're active. And what happens when volatility sellers are active? They're saying that there's no fear in the markets. There's no fear that the markets are going to go down. And the flip side of that trade is to get long the equity futures.
So we've seen that happen for the past couple of days. That trade has worked out recently. In fact, over the past couple of months when volatility has spiked, the volatility sellers step in there and they start buying S&P futures as well too. But the VIX at 19% or so, JD, could be rather troublesome. It's simply too low in portraying investor complacency. The last time this happened, mid-February and early March, just before the markets got whacked.
J.D. DURKIN: I know you also closely follow gold. What does the recent strength in that particular commodity tell you, Bob, and what should we know?
BOB LANG: Well, gold has been a strong mover in first quarter. It's up over 16%. We recently saw a gold tick above 2,000 an ounce, I think it was yesterday, and a little bit on Wednesday. Inflation is high. Dollar denominated assets have been selling off as well.
When gold touched that 2,000 level, JD, I noticed it was about 2% or so away from all time highs for gold, which we're seeing is spectacular over year-- not just in 2023, but certainly going back to the latter part of 2022. Gold has been shining bright along with silver as well too. So hard assets are certainly in demand right now in the marketplace.
J.D. DURKIN: All right, we're just a few hours away from the conclusion of the first quarter of 2023. Bob, what is your read on the economy, as well as the overall market at this point of the year?
BOB LANG: You know, interestingly, JD, the economy is holding up pretty well, but we are not yet seeing negative job numbers. I don't think that those negative job numbers are going to be seen until later on in the year, maybe September or October. There's a huge lag in the data with jobs numbers. Now, jobs numbers are going to be coming out next Friday of course.
And interestingly enough, next Friday is a market holiday for Good Friday. So it'll be interesting to see how the market responds to this next set of data. We do have a little bit of jobs data coming out, but it's really been that area of the economy that has been super strong that has been carrying the rest of the economy as well too.
The Fed is still rather pessimistic though as we saw from the dot plot and the GDP estimates and forecasts a couple of weeks ago after the Fed meeting. They're looking for less than half a percent growth for 2023. Yet, the Atlanta Fed GDP now number says that we probably have about a 3.2% growth in first quarter of 2023. That would be a really strong number, especially coming off of a decent fourth quarter number in 2022. So regardless, the elevated inflation is going to be a hindrance to growth. And we see that a slew of layoffs, again, if it doesn't come in the next couple of months will be probably becoming later on in 2023.
J.D. DURKIN: Now, Bob, you shared the charts of Chipotle, Deere, Marvell, and Ford with AAP members earlier on this week. But I hear it was Chipotle that specifically most stood out to you. What is that chart telling you?
BOB LANG: So Chipotle is working on higher highs and higher lows with some really strong volume. The chart is fantastic. It is a bit overbought right now. The company reports earnings in about four weeks. The stock has made it through some very difficult resistance levels recently. And now, it's set up those resistance levels of nice support.
So I wouldn't be inclined to add shares of Chipotle here right now, JD, but I would wait for a bit of a pullback, maybe down to about the 1,600 level. The 20 day moving average has been separated from the current price level. There's a lot of distance between there. We usually see that 20 day moving average act as a magnet to pull the stock back in.
The markets are quite a bit overbought right now overall. And according to the oscillators, and according to a lot of the other metrics that I'm looking at. So Chipotle also in that camp. We get a little bit of a pullback to that say, 6,500 level, call it 1,595 to 1,600, that would be an area where you'd want to back up the truck and add more burritos to your portfolio.
J.D. DURKIN: Now I'm hungry. So thank you for that. Thanks as always for taking the time to join me here. Bob, Happy Friday. Enjoy the final trading day of the quarter, and we'll do again soon. Bob, have a great weekend.
BOB LANG: Thanks JD, always great to be with you.
J.D. DURKIN: All right, folks as we wrap up, a reminder to members that our next monthly call will kick off on Tuesday the 4th of April at 12:00 PM. Chris Versace, as well as TheStreet's Editor-in-Chief Sara Silverstein, will be live to break down everything you need to know as the new quarter gets underway. And you are not going to want to miss it. You will want to tune in. Have a great weekend. We'll see you soon.