It is much of the same yet one week after another. We are moving south of 30,000 on the Dow and below 3700 on the S&P 500.
We have yet to get to the June lows, but we are not far.
The argument by bulls was that inflation was easing and the Federal Reserve would not need to raise rates higher and would just hold.
That argument was toasted after the Fed chief asserted that the Fed would not stop raising rates until it had real numbers to indicate that inflation was under control.
Moreover, they provided a road map into 2023 that indicated more increases pushing the Fed funds rate up past 4%.
We are at 3.25% now.
That certainly means the next increase will be another three quarters bump with a possible another before the year is out.
For all our problems, at least the dollar has strength and is favored as a safety net compared to other foreign currencies. The British pound has fallen to levels not seen in 40 years and almost trades at equal value to the dollar.
It was not that long ago that the pound traded at 1.5 to the dollar.
The rest of the foreign currencies are not in much better shape, falling in value almost daily.
That will make U.S. companies that trade internationally fight the head winds of their products costing more overseas.
On the inflation side, notice that gas prices continue to drop.
You can now get gas for under $3.
It is still higher than what it was before the pandemic, but at least it is some relief.
Housing has hit the head winds of higher mortgage rates.
I am not suggesting the market is dead, but it will cost new buyers significantly more in monthly payments.
Cash is still buying houses in Texas, but that has started to cool.
I am amazed when I go to the local HEB and see the baskets piled to the top.
It may be costing more but people are going to eat and cut somewhere else.
The real problem will come this winter with higher heating costs. Crude may have come down, but natural gas prices are almost triple what they were last year.
The cost of heating your home this winter will be a problem.
Many can sweat the summer away with just a fan but people are not going to freeze in their homes.
How they will pay the bill and what they will sacrifice is the question.
We did make our way through 3900 on the S&P 500 and now the big watch is to see if 3600 will hold.
Should it not, we can easily go much lower to around 3200.
The news has gotten so negative that the “Chicken Littles” are getting much louder.
Not calling the bottom but it is on the horizon.