We made it through another week without a catastrophe, yet it’s hard to find anyone with any confidence at all.
We’re still above 4100 on the Standard & Poor’s 500 stock-index.
Earnings keep rolling in and though they may not impress on the up side there are solid reports from such old line companies as Coca-Cola.
The beverage maker was able to pass through price increases to keep earnings progressing.
This week we will have Apple, Amazon and Google reporting.
I would expect that these companies may not surprise to the up side, but should fall short.
As such, we are heading into the Federal Reserve meeting next week with little to expect than another 25 basis point increase.
While GDP will be announced, it should have little real impact.
The economy from my viewpoint may not sizzle, but it is not a recession to date.
The one key factor will be the CPI.
I am not sure the Fed target of 2% is realistic.
We seem as a society to withstand the current higher level of prices.
I am not saying that I enjoy paying more, but it is not impacting my life significantly.
I would appreciate lower prices, but don’t see that coming any time soon.
Earnings are always the key measure.
Some companies maintain earnings through cost cutting.
You see this play out with the three big tech companies reporting this week slashing tens of thousands of jobs.
That can work for a couple of quarters, but you have to move merchandise.
That has been a recent concern for Tesla as it has cut prices to pick up sales.
That is not a long-term winning plan. The American consumer is not sitting on its wallet.
Some say that this is because they were literally locked up in their houses for 2 ½ years due to the pandemic.
To me it is more about an economy that is vigorous in a society that wants to move forward despite all challenges.
That is not to say that you have to be reckless. Last week, I bought some six-month Treasuries rather than shopping around various banks for CDs.
It had been quite some time since I had been in that market, but the yield was attractive for a safe asset.
I will do the same next week after the Fed announcement.
That is not to say I am converting equities into cash, rather cash into a higher-yielding instrument.
I did this online through my brokerage account.
I did have a query from a friend about whether to purchase a Citi Bank preferred.
The interest was raised due to the higher yield on the dividend.
The kicker, I explained, is the price paid today is higher than the stock can be called back.
It was trading above $29 and could be called at $25.
There is no saying it will be called, but if it did, you would not get your original investment back.
As a rule, I never pay higher than the par value to avoid such a situation.
I don’t chase yield as I learned the hard way years ago.
