For all the talk about recession, the equities market had the best July since 1939 as reflected in the over 12% increase in the Standard & Poor’s 500 stock-index.
We did get the first report on Gross Domestic Product for the second quarter and it reflected an almost 1% drop.
That combined with the drop in the first quarter meets a definition of recession.
I still have to point out that we are at record low unemployment and wages are growing.
It seems to me that with the recent earnings reports that we may be experiencing a stagnant economy with rising prices.
Some would call that stagflation.
It is interesting that much of the recent rise in stock prices have come from earnings reports that were not better than expected.
In fact, they were just not as bad as some thought they might.
Not sure that is a ringing endorsement for the economy.
It did however push the S&P 500 stock index above 4000.
That is significant as the index had dropped below 3900 which was viewed as an important barrier.
Some were concerned that once the index broke that level, the next stop might be 3400.
Now we are getting many who think the worst is behind us.
I am still concerned about the level of inflation we are currently experiencing.
We had relief from commodity prices as evidenced by crude dropping below $100 per barrel.
Other commodities also dropped to significant lows such as wheat.
The coming winter will be a good measure.
The harvest will be over and cold temperatures will drive up the demand for natural gas that hasn’t shown any signs of giving back recent gains.
Of interest to investors will be whether the Fed feels that the past two three-quarter-point rises were enough for now.
Many have suggested that the Fed can take its foot off the brake of higher interest rates.
Demand might be slowing a bit as shown from projections from Walmart and Amazon.
Housing is starting to slow down after a substantial run up in value of homes.
It would be nice if there is such a thing as a soft landing.
Some speculate that the recent rise in the equities markets is a bounce in a long-term bear market.
I have been on that side, but the recent movement in the market certainly gives hope to the bulls on Wall Street.
One of the real interesting elements in the recent bounce back is the lack of leadership from the FANG stocks.
Some think the vaunted group may have lost its luster.
They said the same thing about Bitcoin when it was $18,000.
Just in case you haven’t noticed, the crypto currency is now above $23,000.
As they say there is a season for everything.
The best part is that it is so unpredictable.
