Author: fdacic

Weekly Update

Two Sector Charts Give Us Overall Market Clues


Published September 2, 2022

 

Since Fed Chair Powell’s comments a week ago markets have been off-kilter. The notion of a Fed shift to lowering interest rates in the first half of next year has been squashed, replaced by expectations that rates will remain flat at an elevated level for most of 2023. The bearish narrative is that come October corporate earnings reports will deal further evidence of a notable slowdown in the U.S. economy. Slowing economic growth combined with stubborn interest rate policy makes for an unhappy stock market. The bullish case points to very solid employment numbers and generally good consumer financial health with expectations that any recession will be brief and shallow. (more…)

Weekly Update

The Market Sans Energy Is Not So Pretty


Published August 26, 2022

 

With summer winding down, we await the post-Labor Day return of a fuller market trading pattern to provide better clues of investor thinking. In the meantime, the summary below from Delta offers a good overview of the current economic data.

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Weekly Update

Bulls and Bears in a Massive Tussle


Published August 19, 2022

 

It has been quite a long time since we have seen such disparity in the narratives flowing down Wall Street. How long and hard the Fed will tighten rates is one source of contention. But it’s not the biggest. That would belong to where corporate earnings are headed, which is sort of a Street barometer for whether or not the economy falls into a recession (how deep that recession is a third dimension discussion floating around also). (more…)

Weekly Update

Key Economic Indicators to Watch


Published August 12, 2022

 

The article below from Zacks provides a good overview of the key economic indicators to look for as we move into the second half of the year.

“The Federal Reserve is actively trying to curb demand in the economy by raising rates, and all the talk is about whether they can usher a ‘soft-landing’ without triggering a deep recession. So, the Fed will be a key factor to watch in the second half of the year. But I also have three other economic fundamentals investors should put on their watchlists, as they could be key in determining the path of the economy and markets over the next year. (more…)

Weekly Update

Market Recovers to Resistance


Published August 5, 2022

 

 

The stock market is at a crossroads having recovered the entirety of its June plunge. Prior to that plunge, stocks ran in place for several days as the bulls and bears fought mightily. That standoff was won by the bears, and the plunge ensued. The counter-rally, once it got going, has been almost as swift. (more…)

Weekly Update

Bulls Find Some Traction


Published July 29, 2022

 

In a bull market, investors buy the rumor and sell the news, with the selling being typically light. In a bear market like we are in now, this week showed us it is the opposite. Investors fear the news, sell stocks down on the fear, buying them back when the news, though bad, is not quite as terrible as it could be. So it was with the Federal Reserve announcement this week. (more…)

Weekly Update

The U.S. Dollar Is the Standout This Year


Published July 22, 2022

The only consistent winner during this bearish stock market period has been the U.S. dollar. Commodities had a brilliant run (blue line below) but have fallen off substantially in recent weeks. Bonds have followed stocks into the cellar in a rare case of very high correlation between the two major asset classes. Only the U.S. dollar (green line below) has held up. (more…)

Weekly Update

Labor Market Details Reveal a Weakening Condition


Published July 15, 2022

 

Last week we noted that some economists argue we are not approaching (or in) recession because the labor market is too strong to suggest that. This week, we follow Schwab’s Liz Ann Sonders as she takes a deep dive into the state of the labor market and comes to a different conclusion, namely that the labor market, though strong, has been trending weaker. Here’s Schwab’s Sonders with all kinds of analysis to back up her view. (more…)

Weekly Update

Not a “Real” Recession


Published July 8, 2022

At some point, all the bad news gets priced into stocks. We will see if that has happened in the coming weeks when companies report their quarterly earnings. The bearish market case says that falling corporate earnings are the next shoe to drop. The bullish case points to a myriad of seasonal factors, such as mid-term election market history, to suggest that the worst is behind us in stocks. (more…)

Weekly Update

The Drivers of Shelter Inflation


Published July 1, 2022

Housing is a critical piece of the economy. Not only is a home the single largest investment most people make, but the industry built around housing – furniture, repair, mortgage finance, et al. – represents a major component of consumer spending. Many homeowners over the past year or two have seen the value of their house soar. That spike in prices has rippled through to higher rents, which is a significant component of reported inflation. Thus, the financials of the housing industry are very important. (more…)