We made it through the holiday shortened week and the prospect of Easter Eggs was not enough to move the equities markets north.
To date this year stocks are down over 7% and bonds are down over 8%.
History has shown us that stocks can and do move together.
It is becoming more and more a call that inflation is turning more to stagflation.
Stagflation is when the economy slows while inflation is still strong.
The real problem with such a situation is that more times than not we then end up in a recession.
It appears now that it is not so much whether if but when the recession is coming.
That is a daunting problem for stock investors.
Last week we did get most of the big financial institutions earnings reports, lacking only Bank of American which comes early this week.
The next wave of reports will be tech with the likes of Netflix, IBM and Snap.
Hopefully the tech sector will fare as well as the financials which were better than expected.
That is not to say though that all was perfect as some had problems that limited earnings.
While I see the impact of inflation every day, it still seems that people are out participating in this economy.
That is not to say that the higher costs are not felt but that it just seems that the public has not pulled back buying.
I also want to point out that there is still a significant number of analysts that are speculating that instead of stagflation, that inflation will be peaking soon and drop back.
I hope they are right but just don’t see prices dropping until the demand falls.
That is sort of a basic rule of economics which we seem to ignore.
With wages climbing and unemployment so low, I just don’t see people cutting back till the economy hits a rough patch.
That could and probably will be a recession.
Never forget we are only into the early stages of the Fed tightening money supply and raising rates.
One good thing coming out of concerns from Washington DC about the inequity of wages is the focus on what companies do with their earnings.
It appears for the near term that stock buy backs are going to dwindle and dividends will rise.
Being an investor of companies that pay dividends, I am a happy camper.
There is always the other side and the push for unions is coming back.
The recent push at Amazon and Starbucks is finding tis way to Apple.
I understand the concept but just have never found unions to be a productive factor in growing the economy.
But I totally understand workers believing they are underpaid and overworked.
As summer quickly approaches, it certainly seems that we have put the pandemic behind us.
That was evidenced last week with the earnings of Delta. People are out and traveling.
That has to be good for hotels, restaurants and any other form of entertainment.
You just can’t keep down forever. It is remarkable how fast we adapt and move on.
Little or nothing is set in stone these days.
If nothing else maybe on should invest in all that is change.
Some would just call that technology which has been a homerun.
Finally, I have to give it up to Elon Musk.
This guy is doing more for our economy and way of life than almost anyone I can imagine.
He has now taken aim at Twitter.
While I don’t use Twitter, I do appreciate what it has become.
His efforts to buy Twitter is really stirring the pot.
Mr. Musk is more fun on a daily basis than you or I deserve.
