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…)
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…)
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…)
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…)
Published June 24, 2022
While no one has any clue which way the stock market goes from here, what we do know is that the magnitude of negative sentiment is extreme. The last time we saw consumer sentiment at these levels was in 1980, a dismal period for the economy. The current sentiment reading seems very much at odds with what’s really going on in the economy. (more…)
Published June 17, 2022
Investors got what they thought they wanted this week when the Federal Reserve hiked interest rates by a full 0.75% and talked even tougher about fighting inflation. But a little post-rate hike relief rally gave way to yet another selloff the following day.
Investors have quickly shifted from worrying about inflation to fully embracing talk of a recession and downward revisions in corporate earnings. By many accounts, the recession is already here. It certainly felt gloomy and heavy in markets this week. (more…)
Published June 10, 2022
Investors are facing a tremendous amount of uncertainty these days as inflation continues to push out the timeline for when the Federal Reserve might pause interest rate hikes. Friday’s “hot” inflation data offered the Fed no new cover for backing off their inflation-fighting posture. (more…)
Published June 3, 2022
This week, we check in with the folks at Schwab who just published their mid-year outlook. It’s a longer piece than we usually offer in our weekly, but chock full of data and insights from one of the largest retail brokers. We hope you find it informative. (more…)
Published May 27, 2022
After seven weeks of declines, the stock market finally found some buyers this week. Still, the trend remains down. The comments below from Delta Research provide a couple of charts to frame the recent declines and what might lie ahead for the stock market in the coming months. (more…)
Published May 20, 2022
Do you remember a couple of years ago in the height of Covid fear when the price of oil went negative? The global economy shut down. The world was suddenly awash in oil. And there was no place to store it. Nobody wanted the excess oil barrels. Holders of oil had to pay someone to take the excess off their hands – a negative oil price. Things have dramatically changed since then as the price of oil has skyrocketed to as high as $130 per barrel. (more…)