Weekly Market Report
Thank you for being a subscriber of _ALPHABETASTOCK'S REPORT._ This
is only an excerpt and paid subscribers have access to this and all
the features. _SIGN UP NOW FOR $19.95_
[[link removed]]_ OR __SAVE OVER 50% BY
PAYING ANNUALLY FOR $99.95
[[link removed]]__.
[[link removed]]_
My wife constantly tells me that not everything is logical, but these
markets, monetary and fiscal policies are purely insane.
CONSUMPTION, THE PHILLY FED INDEX, AND UNEMPLOYMENT WERE GENERALLY
POSITIVE. At the same time, the EMPIRE STATE INDEX AND REAL ESTATE
ARE WORSE.
Everyone knows that one of the biggest accelerators of inflation is
government spending…SO THE GOVERNMENT PASSES ANOTHER MASSIVE
SPENDING BILL TO “COMBAT” INFLATION.
This has confused me. I am not alone, as many battle-hardened
investors are perplexed by the US macroeconomic numbers.
After nearly two months of a bear market rally and negative news, this
end of summer looks like the end of a positive rebound in the markets.
(Notice the break through the R1 on the S&P 500 chart)
BOTTOM LINE
Does this mean I am bullish? No, there is an increasing concern that
we could be heading to another dip because of The Fed’s response to
increasing inflation.
If you are confused about the direction of the market and economy, you
are not alone.
SOFT LANDING? THE FED
This week, JPMorgan CEO Jamie Dimon told affluent customers on a
conference call that there is a 10% probability of a “soft
landing,” a 20%–30% possibility of a “mild recession,” a
20%–30% chance of a “harder recession,” and a further 20%–30%
chance of “something worse” than a deep recession.
According to Dimon, the business was “bracing ourselves” for an
economic hurricane in June. Major financial institutions appear to be
divided; although some continue to predict that the United States will
avoid a recession, others concede that a gentle landing is improbable.
The belief that the Federal Reserve will need to take additional
action to prevent inflation is now one of the most prominent trends.
This week’s inflation rate is still very high at 9.18% YOY.
Even the Fed anticipates that interest rates must reach a
“sufficiently restrictive” level to reduce inflation and remain
there “for some time.” “Restrictive” means what?
In the past, raising interest rates to the level of the Consumer Price
Index (CPI) was necessary to stem the flow of inflation.
The Fed, in my opinion, is keeping an eye on CPI and the unemployment
rate to stop raising interest rates once it reaches at least 5
percent. Looking at the current response, the Fed has to raise rates a
lot more (double?) to bring inflation down. This is very tricky given
the high value of the dollar.
IMF LOWERS GLOBAL ECONOMIC PROJECTION
IMF Director Kristalina Georgieva hinted at it in a blog post, and the
fund lowered its estimate of global GDP growth for 2022 and 2023 for
the second time this year. It anticipates that growth will drop from
6.1 percent last year to 3.2 percent this year and to 2.9 percent the
next year.
However, for some people, the situation is not terrible enough.
“Next year is anticipated to be much worse, with the growth of only
2.9 percent, barely over the 2.5 percent growth level that the IMF has
traditionally regarded as a worldwide recession. However, that
forecast is predicated on the status quo.
More threats are emerging, including the potential for Russia to stop
gas supply to Europe. According to the IMF, that would increase
inflation even further and reduce this year’s global growth to
approximately 2.6 percent, which is just shy of the hot zone.
We believe that the fact that some people find a downgrade that pushes
present pressures to 2023 to be insufficiently grim is an example of
what Ken Fisher, the founder and executive chairman of Fisher
Investments, refers to as “the pessimism of disbelief.”
This sentiment feature assumes that all negative news is accurate and
will only worsen and that any glimpse of hope is either transitory or
about to turn into something terrible. Bull markets, in our opinion,
are constructed on this intense flavor because, as Sir John Templeton
once said, “Bull markets are founded on pessimism.”
Therefore, don’t simply predict more bad times in the future based
on this prophecy. Instead, think about how it—and the negative
responses to it—should help reality provide the kind of pleasant
surprise that stocks usually appreciate by lowering expectations.
KEY EVENTS & CALENDAR
* Tuesday, August 23 – New Homes Sales (July)
* Wednesday, August 24 – Core Durable Goods Orders (Mom) (July)
* FED TALK & JACKSON HOLE MEETING
The release of updates on durable goods orders, home prices, PMI data,
and the highly followed PCE price gauge next week’s economic
announcements might also cause disruptions.
The consumer and technology industries will once more be flooded with
earnings results, with Dollar Tree (NASDAQ: DLTR), Dollar General
(NYSE: DG), Nvidia (NVDA), and Salesforce (CRM) among the leading
names.
The Jackson Hole meeting at the end of August might be an additional
adjusting factor for Mr. Market’s projections. Jerome Powell will
use this chance to reiterate the significance of controlling
inflationary expectations.
Understanding whether problems with the energy supply will result in a
slowdown in activity in the second half of the year after resisting in
the first depends on this anchoring. IF THIS IS THE CASE, THE
RECESSION, IF IT HAPPENS, COULD BE DELAYED UNTIL 2023.
Did you enjoy the excerpt?
_TRY ALPHABETASTOCK REPORT FOR 30 DAYS FOR $19.95_
[[link removed]]_ OR __SAVE
OVER 50% BY PAYING ANNUALLY FOR $99.95
[[link removed]]_
SINCERELY,
Irving Wilkinson
Editor
AlphaBetaStock.com [[link removed]]
-------------------------------------------------------------------------------------------------------------------------
Unsubscribe
[[link removed]]
16192 Coastal Highway, Lewes, Deleware, 19958, United States of
America
