The stock market continues to baffle investors with a hard down rout a week or so back, only to be followed by some green in the days that followed.
With half the companies already reporting earnings, although some stocks cratered on their reports, a few of the big boys posted ok results. Amazon, Microsoft, and Apple surprised with the relative upside. These investor favorites provided some tailwind to the averages and the indexes rallied late into the week.
Jim Cramer, noted analyst and CNBC stock celebrity, didn’t go so far as to call an absolute bottom but did say on Friday, July 26th “now is the time to buy stocks”.
Jim is a smart guy to be sure, but seeing as no one can forecast markets at any time, take his suggestion with the proverbial grain of salt.
Prudent investors would be best to nibble instead of gorge, as other noted analysts forecast stocks will retest the June lows. Bank of America on July 29, warned the current rally could only be a head fake. Known as a bear market rally, these brief pops can then give way to further lows.
Lord knows we have seen this movie before, where hopeful investors get carpet slammed every time they buy into the enthusiasm of the latest stock pop.
Meanwhile, Bitcoin turned off its recent mid-June lows of around $17,000, touching into the 24,000 level where it sits at the time of this writing. Chartists meanwhile await “Wave 5” (Elliot Wave theory) to occur. Wave 5 is a classic head fake rally that gives way to the final deflation, which could eventually take Bitcoin down to about the 8,000 to 3,000 level. Only time will tell if Bitcoin beats the historical charts and starts a new phase to higher highs or mirrors previous mania crashes and causes more pain in the days and weeks to come.
The news is alight once again with calls of foul play, as public disclosures revealed House Speaker Nancy Pelosi’s 135-millionaire husband Paul recently negotiated about 5 million dollars worth of the semi-conductor stock, Nvidia.
The Hill.com revealed “Asked about her husband’s decision to sell his shares given the timing of the House’s vote on the chips bill, Pelosi spokesperson Drew Hammill told The Hill in a statement, “Mr. Pelosi bought options to buy stock in this company more than a year ago and exercised them on June 17, 2022.”
The big deal here is the senate is voting on whether to give 50 billion in free money to the for-profit chip companies to “bolster American chip independence”.
No one knows but Paul Pelosi whether he acted because of the proposed giveaway or just got lucky, but The Hill.com also said: “During a news conference earlier this month, Pelosi said her husband does not make sales or purchase stock based on information she has”.
No matter where the truth lies, there is a push to eliminate such loopholes with new laws but so far, certain members of both political parties are fighting the move to prevent such restrictions.
On the inflation front, last week’s PCE, (Personal Consumption Expenditures index), which measures the change in the prices of goods and services purchased by consumers, rose by 6.8% in June as compared to the same period last year, according to data released by the Bureau of Economic Analysis.
This reading gets close to setting an all-time high, so inflation is nowhere near backing off. There was talk “peak inflation” had hit in late May, but recent statistics all but killed that theory a few weeks back.
With this latest reading, it’s in this analysts opinion inflation is not going away anytime soon. With consumer credit card balances soaring along with rising defaults on loans of all types, American consumers may run out of rope.
With the Federal Reserve determined to rein in inflation by continuing to raise interest rates, this may even put more strain on consumer pocketbooks and therefore on the economy and stock market in general.
“Watching the markets so you don’t have to”
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This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, SDSU, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214