We had a chance last week to post three straight weeks of gains last week and the first time in several months.
But then there were over 500-point drops in the Dow on Thursday and Friday. That turned a gain to a loss of 1%.
Pointed inflation concerns surfaced after the latest Consumer Price Index report came in just below 8%. That is four straight higher-than-expected CPI reports. I don’t see much that would indicate that inflation is temporary.
I would point out housing, food, energy and wages are among the items costing consumers more these days.
Chipotle reported higher-than-expected earnings and attributed that and future gains to their ability to raise prices and not lose clients.
It’s obvious we stop inflation by slowing down demand.
Finally, we end the thought that you can print money with no consequences.
The only people that can support such a theory are politicians and professors with little or no stake in this game.
This sets up a week where we now look to forecasts of what will come next. It is no coincidence that we digest a lot of bad news.
You have the potential conflict in Ukraine, ongoing supply chain issues and rising interest rates.
I am baffled that there is so much concern on whether the first rate increase in March will be a quarter or half-point hike.
When you are at zero, I am mystified that one increase makes that much difference.
We must figure out how many will come. It seems that we must come to terms with the fact that easy money is behind us.
I don’t see that as a catastrophe. A steady climb just will be a fact.
People have to focus on earnings. That is the real driver of equities markets.
The rest is noise. Does any of this noise actually impact earnings?
I hate to say it but nothing in Ukraine will impact the next quarter’s earnings reports.
I really don’t see the trucker blockade in Canada really impacting auto production.
There are all the geo-political news to keep five or six news stations busy 24/7. It will not go away. We are addicted to bad news and worry.
Inflation is a real tax on consumers’ savings. You can’t make the math work if you earn next to nothing at your bank and everything you buy is going up nearly 8%.
That does not turn out well if it continues for some time. For all of you who enjoyed the rise in your net worth due to the increase in your home value, don’t forget what 2008 brought.
The devil is in the details and the confidence of investors. We are starting to get on shaky ground.
It wouldn’t take much to send this market down 20% and that would just be a correction.
It can’t go up forever. So enjoy Valentines and look forward to spring.
I would say March Madness, but that would relate to a turbulent stock mark this year rather than basketball.
