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The stock market has been quite resilient this year but my premise is that the Fed’s rate hiking is still working its way through the economy. If correct, this will show up in earnings at some point. I already thought 4Q23 earnings from Big Tech were weak – but the market has looked past it so far.

Two data points out this week lead me to wonder whether the 1Q earnings season could be the catalyst for the next leg down in stocks. On Sunday, Tesla (TSLA) reported disappointing 1Q23 sales numbers and the stock fell 11% this week. On Wednesday, Costco (COST) reported disappointing March sales numbers and the stock fell 2% on Thursday.

I don’t want to extrapolate too much from these two data points but I’ll be paying close attention to any further signs of weakness when companies start reporting 1Q23 earnings next week.

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