In a holiday-shortened week, Texans got their first real taste of winter this year.
We also got a report last week that inflation hasn’t gone away as the CPI moved up slightly to 3.9% from 3.8%.
The various indexes and averages shrugged.
The Dow suffered more last week due to Boeing’s problems with the 737 Max.
Nothing like a door blowing out in mid-flight to cause concern and grounding all of those planes until further notice.
The tech sector carried the ball as it has for quite some time.
We did begin the earnings season with the financials first out of the gate.
JP Morgan led the pack, posting a positive earnings report along with a positive forecast.
Citi, on the other hand, had to adjust for losses at foreign assets.
My concern in the financials is with the regionals that face nonperforming loans associated with office buildings.
These plans are due for refinancing at higher rates with dwindling occupancies.
It can only end in write downs reducing earnings.
This week, we also get the start of the election season with the Iowa caucuses.
The election process in the past has been positive for equities. We shall see this time.
On top of all the geopolitical concerns, the conflict in the Middle East is now spilling over into Yemen.
The U.S. and U.K. military have launched attacks at the Houthi bases.
There is more than enough news to cover investors, but so far the equities markets have just shrugged and moved up.
A significant basis for this climb is the belief the Fed will start lowering rates in March.
There had better be some help in reducing inflation sooner than later.
Historically, this period between the middle of January through tax day has been rough sledding.
I am leaning toward the belief that the Fed will sit on their hands past March.
I am sorry, but 5% Fed funds rate is not high.
It is just a shock after a decade and a half of 0%.
At least middle class folks can earn a little interest on their savings.
On the other hand, the rising Federal debt is a problem of which no one wants to resolve.
The answer of less spending and higher taxes for everyone is a political loser.
Saving the day though is an economy that despite all the obstacles moves forward which supports earnings.
We can discuss all sorts of various factors impacting equities, but earnings are the real deal.
