Last week we got big banks Wells Fargo and JP Morgan Chase with earnings reports. The rest of the group comes this holiday-shortened week.
The 5G rollout by Verizon and AT&T comes this week.
Last week we had 7% inflation numbers that were the highest since the mid-80s during Ronald Reagan’s administration.
Markets were not impressed and the downward trend continued.
It seems reasonable that traders factor in the price-to-earnings multiple that climbed above 30 in many cases.
Then you have the Federal Reserve raising interest rates and pulling back on easy money policies.
There is little confidence that the Fed will handle inflation in a manner that won’t be negative.
However, I believe the earnings reports will display a solid economy.
The unemployment rate dropped last week to levels not seen since the beginning of the pandemic. We still have job vacancies that should lead to higher wages.
The commodities side of the ledger has finally awoken from a decade-long bear market.
That’s shown by a trip to the grocery store, gas station or your local home improvement store. This has not been lost on precious metals either.
It’s interesting that earnings will come in strong - but for how long? The market trades way ahead of itself.
Last week JP Morgan had an excellent report, but the cost of doing business in the future was projected to go up more than expected.
This is the hidden tax of inflation. Wages go up along with other factors that companies try to pass through to the consumer.
It becomes a real problem when the purchaser balks and then we have stagnation.
This is a real juggling act of increasing sales without giving it all back in higher costs of doing business.
This is where you would think that technology would have an advantage.
Last week did not reward such, as the technological stocks were sold with vengeance.
You old line cyclical stocks were favored. It just seems that there is a move toward stocks that will pay a dividend.
Foreign stocks look promising. This is where Exchange Traded Funds seem to work.
You can buy foreign stocks through brokerage, but the commission is much higher. I created a separate account just for those purchases.
For most though, buying an ETF for a particular sector in a country or region seems much more reasonable.
We will finish the week with a report on the leading economic indicators.
I can’t imagine that it won’t be anything but positive.
So here you sit looking toward the rest of the year trying to decide how much longer this ride can go.
There are opinions on all sides with most being positive.
I am not sure, but I was wrong about a correction the last quarter of 2021 and looking for value has long since sailed.
Maybe the FANG stocks can drive this market further.
It is hard to bet against them.