There are numerous trite expressions related to investing.
One is buy on the rumor sell on the news.
Well last week the news couldn’t have been worse.
Though there is a ceasefire in Iran, no crude is making it through the Strait Of Hormuz.
The CPI data came in showing a rise in inflation.
Even if it was small, it was headed in the wrong direction.
Negotiations with Iran failed over the fact that Iran will not give up plans to build a nuclear weapon.
I could go on, but you get the message.
The markets just shrugged and moved up with the S&P 500 ending the week over 4800.
It just shows you how much buying pressure there is behind this market.
The early indications for this week are that more bad news is on the table.
The Administration has announced that it will keep the strait closed, even though it did sweep for mines.
China may end up with a 50% tariff after it announced plans to provide air defense equipment to Iran.
It seem all but certain that the Producer Price Index (PPI) data this week will provide even further evidence of rising inflation. There is also the fact that job growth is slowing and housing costs are pricing many home owners out of the market.
It seems more certain that the Fed will not lower interest rates as inflation continues to rise.
I am not sure the Fed has anything in its arsenal that can really stem inflation outside of sending the economy into a recession.
It is really hard to find a silver lining.
Well, there is the fact that company earnings continue to grow.
Productivity has significantly increased at the same time.
Earnings are what drive the value of stocks.
It should be the only real measure, but fear and greed rule the show.
You must also never forget that stocks are not priced on what is happening today but what investors see coming in 9 months.
It is sort of like any news is old news and not worth the paper it’s written on, as it applies to investing.
I have been somewhat astonished at the news coming out of Intel.
It seemed the chip maker was a washed-up legacy company that had been passed by.
Last week, Intel announced a couple of deals with members of the Mag 7 for memory chip production.
Just goes to show you that what was given up for dead sometimes makes a comeback.
You only have to look at what has become of GE after it was split into various parts.
It is still hard for me to find any real value, as we only seem to have small corrections from which we bounce back from sooner than later.
It does seem though that some of the strongest companies that are one of one are hard to ignore. When you look at Netflix, they really have little or no competition.
You could say the same for Google but there is the specter of AI.
These one of one companies have eliminated their competitors.
Nvidia is the other obvious example. If you won’t take these front runners, then the only semblance of value are the software stocks, such as Microsoft and Oracle, who have been beaten down on concerns over AI.
I will sit on the sidelines and let this all play out.
There are too many uncertainties for me.
I am sure it is an opportunity, but I just don’t have the confidence.
Then again, I am waiting for things to really get bad when no one has confidence.
