We made it through the first two quarters and it was beyond ugly.
This was the worst market performance for the averages and indexes for the first six months of the year since the 70s.
I lived through that bear market with interest rates climbing to 20%.
I don’t see anything similar happening now, but it won’t be fun.
With the markets off at least 20%, it is just a matter of how far south this thing can go.
It will be up to the Federal Reserve. While they have raised rates, it is not even close to 3% for the Fed funds rate.
It is in that territory that people take money off the table and place it with the safety of Treasuries.
We will be enjoying a holiday-shortened trading week. The Fed will release its minutes from the last meeting and the jobs report will come out Friday.
Many expect the report to report a drop in new jobs from the strong May report, which reflected an addition of 390,000 jobs.
It is sort of hoping for bad news to be good news.
If the report is the addition of 200,000, it would reflect a slowing, but still as strong an economy as when we entered the pandemic.
The thought being that the Fed might not have to increase rates at such a high level.
I would say that crude prices have been selling off and actually show that at the pump.
I even paid $3.99 this weekend for regular gas.
Hard to believe that I could be excited, but any little bit helps. There also was fallback in other commodity prices.
There is also some hope that China is emerging from its hibernation and the supply chain will ease.
I would sure hope so as I have been waiting six months to get my air conditioning unit delivered.
At least the old one is hanging in there.
The supply chain really casts a shadow on the progress of the economy.
It won’t be long and we will know what the GDP for the second quarter will be.
By definition, two consecutive quarters of negative GDP is a recession.
We already have the first quarter in the books negative.
I find it hard to believe that the last quarter can be positive but anything in this crazy world is possible.
No matter the definitions, I am just concerned that it will be difficult for this economy for the whole second half of the year.
Many think this could well push into next year.
You don’t have to dig far into the data to see that companies like Tesla and Facebook are discussing layoffs.
I can’t believe that the housing market will stay strong in the face of rising interest rates.
This environment makes mortgages much more difficult and the drop in the wealth effect can curb cash sales.
Such a situation spreads through the whole economy.
My thoughts are to enjoy your summer.
There is not much you can do except to keep as much cash available as possible.
These are the times that you prepare yourself for the value that is just around the corner.