Published November 25, 2022
The stock market began its decline one year ago. We posted the first chart below around that time to point out the danger ahead from the failed break higher in smallcap stocks.
Since that failed breakout, we have seen an absolute assault on markets by the Federal Reserve with interest rates being raised at an almost unprecedented pace. The short-term 2-year interest rate has jumped from near zero to 4.50% in twelve months (second chart). (more…)
Published October 14, 2022
Investors await corporate earnings data over the next few weeks with concerns high that declining earnings outlooks will be the next shoe to drop on stocks. The chart below highlights where we have been on corporate earnings and how things have changed. (more…)
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.
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…)
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 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 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 April 22, 2022
A couple of odds and ends from our reading this week. First, Delta’s observations from the beginning of this earnings season. We note that investors are clearly on edge as the Fed drives interest rates higher, removing the free money that has served as market rocket fuel for the past few years. It will take a few months for the impact of that to shake out. Some argue that a recession is the ultimate result of the Fed’s actions. (more…)
Published February 18, 2022
Stocks remain fully in the midst of a correction, searching for a bottom that may not come until after the Federal Reserve takes action in March. In the meantime, our friends at Delta back up and survey the broader picture to comment on market behavior during various interest rate/economic growth scenarios. (more…)
Published January 22, 2021
One reason for the surging stock market recovery over the past nine months, despite extraordinary unemployment, has been the shift from spending to saving among a broad swath of the population. (more…)