Another positive week for the stock market.
The Standard & Poor’s 500 stock index has climbed from below 3900 to over 4100.
This is happening with the constant reference to the economy being in a recession.
I understand the debate, but there is room on both sides.
Just last week we had a report of much higher than expected jobs creation reflecting an unemployment rate of 3.5% which is historically low.
This comes as earnings reports have been reporting less than stellar results.
Stocks have risen on the theory that the reports could have been worse.
Last week’s jobs report though gives the Federal Reserve little room to do anything other than raise rates again in September.
At least we are still at such low levels that another 3/4% increase will not get the Fed funds rate to 3%.
These rate increases by the Fed are to fight inflation.
I believe some of the rebound in stocks is based on several commodities dropping in value.
We have seen crude dip below $90 per barrel which has allowed gas prices to drop.
There are other commodities like lumber and copper that also have seen drops in value.
This is a relief but it doesn’t stop goods and services from rising.
So this is the conundrum for investors.
While you are grateful for the rebound in the averages and indexes, what is your next move?
Are you going to commit some of your cash to buying at these levels?
Don’t forget we still have Ukraine and Taiwan to deal with.
I haven’t mentioned the Israeli conflict.
We are trending back to higher than usual price to earnings ratios.
As I referenced above, I appreciate the rebound in the value of my portfolio.
Volatility is great for traders, but there is little value for me at these levels.
This is what makes markets, as there is always something for everyone.
