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#1 LATIN AMERICA Again Holds Short-Term Support:
ILF rose 0.6% this week, after losing 1.7% last week. That left it bullish and ranked 1 globally and more attractive than cash. The index is up 2.5% for the quarter (13 weeks), and up 54.5% for the year (52 weeks).
#2 GOLD Rebounds Off Prior Stop-Loss:
GLD rose 2.5% this week, after losing 2.3% last week. That left it neutral and ranked 2 globally and more attractive than cash. The index is down 4.4% for the quarter (13 weeks), but up 41.4% for the year (52 weeks).
#3 ASIA-PACIFIC Posts Another High:
AAXJ rose 6.7% this week, after gaining 1.0% last week. That left it very bullish and ranked 3 globally and more attractive than cash. The index is up 18.1% for the quarter (13 weeks), and up 60.4% for the year (52 weeks).
#4 JAPAN Gaps Toward Previous High:
EWJ rose 4.4% this week, after gaining 1.1% last week. That left it very bullish and ranked 4 globally and more attractive than cash. The index is up 5.4% for the quarter (13 weeks), and up 41.2% for the year (52 weeks).
#5 US SMALL-CAPS Post New High:
IWM rose 1.8% this week, after gaining 1.0% last week. That left it very bullish and ranked 5 globally and more attractive than cash. The index is up 9.3% for the quarter (13 weeks), and up 43.0% for the year (52 weeks).
#6 EUROPE’s Much Ado: IEV rose 1.0% this week, after gaining 0.1% last week. That left it bullish and ranked 6 globally and more attractive than cash. The index is up 0.2% for the quarter (13 weeks), and up 23.7% for the year (52 weeks).
#7 US LARGE-CAPS Post Another New High:
SPY rose 2.4% this week, after gaining 0.9% last week. That left it very bullish and ranked 7 globally and more attractive than cash. The index is up 7.8% for the quarter (13 weeks), and up 32.2% for the year (52 weeks).
#8 CASH and Interest Rates:
SGOV rose 0.1% this week, after gaining 0.1% last week. That left cash ranked 8 globally. The index is up 0.3% for the quarter (13 weeks), and up 3.4% for the year (52 weeks). The US ten-year yield dipped 2 bps to 4.36% and the three-month yield rose 2 ticks to 3.60%, steepening the yield curve to 76 bps.
#9 LONG US TREASURIES Get Death-Cross Bounce: EDV rose 0.7% this week, after losing 1.3% last week. That left it very bearish and ranked #9 globally and less attractive than cash. Long bonds are up 0.4% for the quarter (13 weeks) and up 1.7% for the year (52 weeks) as yields have risen.
COMMODITIES Fill The Gap:
A very bullish CRB fell 1.7% this week after gaining 3.2% last week. That left commodity prices up 24.0% for the quarter (13 weeks), and up 46.4% for the year (52 weeks).
Crude Oil Below $100:
Meanwhile, oil prices (USO) fell 6.4% this week, following last week's gain of 7.9%. Crude is currently very bullish. That leaves US oil prices up 68.0% for the quarter (13 weeks), and up 110.3% for the year (52 weeks).
US DOLLAR Weakens Further:
UUP fell 0.3% this week, after losing 0.3% last week. It is currently bullish—up 0.7% for the quarter (13 weeks), but down 0.6% in the last year (52 weeks).
SEE MOOSECALLS PDF FOR CHARTS AND DETAILS
ILF is the best performer YTD, over the 26, 39, and 52 weeks. It is the hot new hand, but, unless you are a day-trader, as recent performance shows it can quickly inject more pain than gain to your portfolio.
Below we rank 27 major US equity sectors according to their momentum and technicals. We also identify what sectors are working now and have been for awhile. There is no specific sector model to time the group as the ETFs involved may be thinly traded, extremely volatile, and require daily monitoring to avoid disasters. The rankings are more useful for longer term swing trade investors.
This week’s US equity sector momentum is improved: positive; broad-- 70% of our sectors are buy or hold (L70%) with BUYS at 44% (L44%) and HOLDS steady at 26% (L26%). Avoids are 30%. Top candidates this week: Semiconductors, US Tech, Industrials are overbought. Await pull-back.
Below we show the top 10 US stock sectors by year-to-date return. We also identify what sectors are working in the last 2, 13, 26,, 39 and 52 weeks, and over 3 years. Ranking is based on momentum over about six months (26 weeks). It is necessary to monitor more recent returns to make sure a high momentum reading does not mask a sudden weakness in price.
INDICATIONS REMAIN POSITIVE FOR THE GLOBAL ECONOMY (4 OF 4)
An international shipping measure and proxy for current global trade, the Baltic Dry Index rose to 2978 this week, and is 55% up after 13 weeks, a positive signal. (After opening 2026 at 1882, BDI is still well below its 2010 peak @4640.)
Meanwhile, another proxy for world activity, WTI oil price fell to 95.42 this week, but is up 50% in the latest quarter, a positive economic signal. (Oil remains below its 2022 peak ($130), but well above the 2020 Covid low ($10.)
Our proxy for global construction, copper ($6.30) is up this week, and 7% higher this quarter, a positive signal.
Domestically, 10Y US bond yields slipped to 4.36% this week but are up 9 bps over the past 13 weeks, a positive bet on the largest world economy.
US ECONOMY: DATA
MAY 8.2026
PAYROLL, HOME SALES, CONSTRUCTION SOLID
THIS WEEK: GOOD
THE GOOD: WEEKLY Initial Claims (200K) below expectations. WEEKLY Continuing Claims (1766K) down from prior. April ADP employment change 109K beat expectations and previous. April nonfarm payrolls (115K) lagged prior but beat consensus. Unemployment rate 4.3% low and steady. Average workweek up a tick (34.3 hours). Hourly earnings (+0.2%) up in line. March factory orders (+1.5%) better than expected and previous. March trade deficit (-$60.3B) in line with consensus deeper than previous. February and March new home sales (635K and 682K) both beat previous. February and March construction spending both better than previous.
THE BAD: WEEKLY EIA Crude Oil Inventories (-2.31M) draw lessens as oil prices fall. May Michigan Consumer Sentiment (48.2) below prior and consensus. April S&P Global U.S. Services PMI – Final (51.0) down from previous. April ISM non-manufacturing index (53.6) down from consensus and prior. March JOLTS job openings (6.886M) below previous.
THE UGLY: Nothing.
US ECONOMY: INFLATION DATA
LATEST: MAY 8.2026
Q1 Productivity – Prelim (+0.8%) weaker than prior and consensus
Q1 Unit Labor Costs – Warm but cooler (+2.3%) than previous and consensus.
Prior Releases
MAR CPI (+0.9%) hot month-to-month
MAR Core CPI (+0.2%) cooler than expected month-to-month.
MAR PPI (+0.5%) cooler than forecast, in line with prior. (1yr = 4.0%.)
MAR Core PPI (+0.1%) cooler than forecast and prior. (1yr = 3.4%.)
MAR Import Prices (+0.8%) warm, cooler than prior. (1yr = 2.1%.)
MAR Export Prices (+1.6%) warm, but cooler than previous. (1yr = 5.6%.)
MAR PCE Prices (+0.7%) hotter than forecast and prior. (1yr 3.5% up.)
MAR PCE Prices – Core (+0.3%) warm but down from previous. (1yr 3.2% up.)
Q1 GDP-Adv. (+2.0%) below consensus, above prior.
Q1 Chain Deflator-Adv. (+3.6%) hotter than prior and target.
Q1 Employment Cost Index (0.9%) hotter than expected and previous
Q4 Employment Cost Index (+0.7%) slightly cooler than Q3.
Q4 Productivity – Revised (+1.8%) weaker than prior and consensus
Q4 Unit Labor Costs – Revised (+4.4%) hotter than previous and consensus.
Q4 Current Account Balance (-$190.7B) deficit an improvement over previous quarter and forecasts.
FED BALANCE SHEET ($6.71T); FFR @ (3.50-3.75%)
Currently, the Fed’s balance sheet is 6.71T, (up +.01T) in the latest week (5/1/2026). The Fed Funds Rate was lowered 25 BPS to 3.50-3.75% at the DEC10 FOMC meeting. No change at the January, March or April FOMC meeting.
The next FOMC meeting is June 17. Jerome Powell will exit as Fed chair next week (May 15) but plans to stay on as governor. Kevin Warsh is expected to replace him now that criminal charges against Powell have been dropped and the case referred to GAO. Warsh is reputedly inclined to reduce the Fed balance sheet and be more hawkish. Meanwhile, futures make a 2026 rate cut unlikely, and despite the recent Iranian oil price spike, odds of a December Fed rate hike are miniscule and fading.
The Fed Check at 79% turned hawkish as of 1/30/2026 (tighter monetary policy needed to combat global inflation pressures.) The US 2-Year yield at 3.889%, however, is now 26 bps HIGHER than the Fed overnight rate (3.625%), implying near-term US domestic conditions make another Fed rate cut increasingly questionable.
The 3m-10y yield curve steepened to a slope of 76 bps this week, as the 10-year US Treasury yield dipped to 4.36%, and the 3-month cash yield rose to 3.60%. Intermediate term, the curve was inverted from 11/22 through 12/24 but has been positive since. The 30d-10y median yield (3.98%) is just above its 200-day (3.97%) leaving our interest rate signal for stocks neutral.
3-month SOFR yield at 3.60% is down this week, while the 3-month T-bill at 3.60% is up. That puts the SOFR/T-Bill (SOF-T) spread at 0 basis points, below its 200-day average of 19 bps. A falling SOF-T spread signals a safer, more confident financial system.
FED OVERALL THIS WEEK: NEUTRAL (0) LW: NEUTRAL (0)
LATEST Rate Posture: (No Change) NEUTRAL (0)
LATEST Balance Sheet (down .01T) NEUTRAL, (0),
Fed Speak NEUTRAL (0),
Fed Check HAWKISH (-1)
US ECONOMY: RECESSION & GDP INDICATORS
NY FED: MINIMAL RECESSION THREAT DOWN SLIGHTLY
US recession chances one year out: 17.62% (APR 2027) per NY Fed. (Recession expected if chance > 30%.) As of May 2025, the Fed model’s chance of recession fell below 30%, the threshold signaling a recession one year out. It remains there. The risk of recession was the highest in 40 years in May 2024, but it was avoided amid three years of massive Federal deficit spending and historic data falsification at the Bureau of Labor Statistics.
ATLANTA FED: US Q2 GDP NOW at 3.7%
Atlanta Fed Current GDP Model (5/1/2026): Q2 Annualized 3.7% (Last week: Q2 Annualized +3.5%)
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