We were able to post a positive week last week.
Some would say that was the bottom of the recent selloff.
I have no clue but feel that there is more pain to come.
In 2000 we had four bear market rises before the collapse.
You can conjure all kinds of scenarios.
What you have to acknowledge though is the economy is strong.
Unemployment is at 3.6%, which is historically low.
We added 375,000 jobs last month.
Things may cost more but people have yet to stop spending.
In case you missed Econ 101 that is supply exceeding demand, which keeps prices from falling.
The only thing that will make prices drop is for demand to drop so that there is an overabundance of supply.
I don’t know what will make consumers pull back.
I have tried to cut back, but there is only so much one can do.
At least gas prices have come
down a bit, but food costs are still climbing.
It takes costs longer to pass through the chain.
I would acknowledge that my limited view of what is happening around me indicates that people may be complaining, but continue on with their lives.
We will begin to get the second quarter earnings reports this week, which will be a valuable indicator of the health of companies.
The rise in supply costs and labor have to have an impact.
Speaking of such, we will get our monthly measure of inflation this week, which will have a significant impact on the Federal Reserve’s decision as to how much to raise rates this month.
Most still believe that a .75 rate adjustment is in the cards.
That will barely push the Fed Fund’s rate above 2%.
It will move mortgage rates up to around 7%.
That could be the first ball falling as housing sales could slow down. Some say that it has already begun.
Elon Musk keeps entertaining us as he notified Twitter that he is canceling his offer to buy the company at $44 per share.
The next great wealth effect will be the lawyers collecting fees as this battle plays out in the courts.
Maybe Elon is not perfect after all, but he has a remarkable track record so far.
I am still in the camp that while the markets have pulled back 20%, they are far from a value play for me.
The price-to-earnings multiples are still higher than I am comfortable spending my money purchasing stocks.
This is far from a fire sale.
There are many though who are putting their cash to work. This is what drives markets.
You have to have a buyer and a seller.
There is enough of an argument for each side to keep this market moving.
I am not sure though that it will make a sustained move north.
As I told one of my trading friends, it seems to be a perfect market for a short-term trader.
It goes up and it goes down - and not in small increments - on a daily basis.
If I was only smart enough to know how to beat the market.
Of course we would all like to be that person.
