Believe it or not, the various indexes and averages had a down week which was the first in over a month.
This is getting redundant, but the Big 7 still lead the way.
Together, they returned over 100% last year.
The other 493 stocks in the S&P 500 index were up but barely.
It is starting to concern some analysts that this is looking a lot like 2000.
I am not as concerned as the economy is still strong and earnings beat projections. You have to appreciate though that CEOs have made it a plan to seriously underestimate future earnings projections each and every quarter.
It is not that high a bar to step over. It is much better to under promise then over deliver.
Last week was not without its surprises as both the CPI and PPI came in higher than predicted, sending predictions of future rate cuts into disarray.
As has been touted by many, the last mile in the inflation fight will be the hardest.
I don’t see the current levels of interest rates being that taxing on corporations’ earnings.
What in fact we are seeing is productivity increasing.
Higher costs are passed through to consumers and they are able to adjust due to higher cash reserves and higher employment levels.
It seems difficult to see a recession just around the corner.
That is not to say there is nothing to be concerned about.
It goes without saying that the geopolitical climate is tenuous at best.
The war in the Middle East that has broken out on multiple fronts.
We have the ongoing war in Ukraine.
China is for the first time having to deal with an economy that is not
hitting on all cylinders due to excesses in the building sector and the public’s loss of faith in future economic growth.
There is even talk out of the current administration about sanctions due to China’s assistance to Iran and Russia.
Europe is not faring as well economically as the U.S.
There will always be things to take into account, but you just have to respect earnings strength.
We can talk all we want about interest rates and inflation, but earnings drive these markets.
I wish I could say with confidence that these better than expected earnings will continue.
I actually believe they will, but it wouldn’t take much to change the course of the economy.
Public sentiment is fickle at best.
You only have to look at the polls of the public’s opinion of the current economy.
It is in fact difficult these days for those of lesser income.
We are in the perfect storm of greed and fear.
It is almost in perfect balance, but it could so easily tip over.
