We are at the beginning of the holiday season with Halloween upon us this week.
It is far from a scary ending to October as we have nothing but significant advances in the averages and indexes.
It seems that 3600 in the Standard & Poor’s 500 stock-index was a floor and my thoughts of possibly challenging 3400 to 3200 were misplaced.
Moreover, there will be a groundswell of thought that the economy is not in serious recession.
That will leave the Federal Reserve in an interesting position of how high they will push interest rates.
It is a given that the next rate increase will be 75 basis points.
Where we go from here is important as the Fed Funds rate is moving in on 4% and the Fed indicated that 4.5% was the goal.
Significant debate has focused on whether the Fed would continue on to 5%.
I can tell you that at 5%, I’ll put some of my cash to earning that level of return with no risk.
I think we will see many investors awash in cash and equities put at least 40% into debt.
That is the old standard of 60 equities to 40% debt. Should you take that much cash off the table, the demand push on equities will subside.
Of recent interest was the news from Amazon and Alphabet (Google) that each were below expectations and the forecasts were not optimistic.
They announced the need to downsize the number of employees and many of those will be recent hires.
This came as Apple announced better than expected earnings.
With Apple a significant segment of The Dow, that average outperformed the S7P 500 index and the NASDAQ index on a percentage basis.
It was still of note that the S&P 500 pushed up above 3900, with many forecasting 4100 before the end of the year.
The old line companies like Caterpillar posted better than expected earnings.
Some were touting that these old line stocks were value plays.
I am not sure that meets the definition, but who cares.
I did see more analysis of companies outside the tech sector that pay good dividends finding favor.
This includes the energy sector from producers, refiners and pipeline companies.
There is another opinion and that is that we are not in a recession, but a period of stagnation with inflation.
As such, the economy will not be strong and wage gains will not keep up with the cost of living.
Many seriously hope that inflation has peaked, but will it actually go down?
Housing certainly hit a wall, which should impact the demand for commodities such as lumber and copper.
Energy prices seem to have stopped rising and natural gas has pulled back, though it is still almost twice the level of last year.
The fact that prices are topping out is good, but not really any relief.
If we can just get this election past us and figure out where we go from here.
I am a big fan of a government that is split where compromise is the only path.
The less government for me is the best government.
It usually promotes more economic growth. Go figure.
