Weekly Market Pulse: Never Mind

The same is true of the value versus growth debate. I heard multiple market commentators last week say that the change in the Fed’s dot plot pushed investors to sell value and buy growth on reduced growth expectations. I say hogwash. The Fed has no idea when they are going to hike rates because they have no idea what the economy will do between now and 2023. Hell, they have no idea what the economy will do between now and the end of the year. Nothing changed last week. The economy is still on the same track it was before the Fed meeting. It continues to recover at a pretty steady pace. And until something real changes, that’s exactly what we should expect for the immediate future.

The correction of overextended markets is just technical, an adjustment of an extreme. It’s what happens in systems like markets. It doesn’t have to “mean” anything other than, in this case, some people felt some urgency to take profits on some assets that had a run-up in price. And it probably isn’t over by the way so if like us you’ve raised some cash recently, you probably want to be patient. That’s the kind of virtue signaling every investor should practice.

The economic data last week was pretty much as expected. Retail sales were down but from a very high level. Anyone expecting that pace to continue was asking for too much. The inflation reports were all “hot” and absolutely no one was surprised by that. Industrial production was up but remains well below pre-COVID levels which is still a concern but not a new one. IP is just 7% above where it was in 2000 and below where it was in 2007. Housing starts were up in May and while choppy I expect that trend to continue. We underinvested in housing for a decade so there’s still plenty of room for catchup. 

We’ll get some more data on housing next week with existing and new home sales. Durable goods orders are expected to be and I’d like to see core capital goods continue to trend higher. Personal income will likely be down but there are expectations for a rise in consumption. That likely hinges on services spending as goods spending starts to come in. 

View single page >> |

Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.