INSIGHTS
JUN
18
COSTA’S CORNER
Again, it’s all part of the waiting game.
With the summer here, almost, we start getting into the waiting game. The Fed will be in session today and tomorrow and markets will be breathlessly waiting for some guidance as far as monetary policy is concerned.
We are in that dead zone of few earnings reports and even fewer corporate announcements. We will wait for the end of the month to see how the second quarter played out.
We will be waiting for the JOBS report; we will be waiting for GDP numbers to come out.
So many things to look forward to, yet, I feel, at this point in the economic cycle, we will be disappointed by almost everything.
Let’s start with the Fed. The consensus, and I agree, is that they will do nothing but make for a stronger case for a rate cut later on. No real reason to cut rates at this juncture and even if we get another dismal JOBS report later this month, I still don’t see the need for any rate cut.
The economy is still growing and we are pretty much at full employment. There is no inflation to speak of even with the global trade tariffs.
Things still look damn good and I think the Fed sees that and will not act without more indications of a slowing economy.
It may take months.
The earnings picture I believe will be a little less exciting and could potentially make for a sloppy July. We have seen US corporations exceed projections more than 65% of the time over the last three years and that may be coming to an end.
Even with lower earnings forecasts, it looks like the market may have priced a better earnings environment than forecast and this could mean a choppy downward slopping market.
A correction? Eh, I don’t think so but we definitely will see some stocks pull back to a great investing point and if you believe in the long term success of stocks, it might be a great time to selectively invest in some potential bargains.
For the next two weeks we will have what I like to call a “Flat-line market”.
Small movements above and below a set point on the S&P. Little volatility and little chance for bargain hunting.
My third and final point about the JOBS report may be the thing to truly watch for. I am not going to predict the final numbers for June but I can tell you that as far as the Fed is concerned, it is ultra-important and they will dissect it and probably act accordingly based on those numbers, so we wait.
I am waiting as well.
50% Stocks
25% Fixed Income
25% Cash
With the summer here, almost, we start getting into the waiting game. The Fed will be in session today and tomorrow and markets will be breathlessly waiting for some guidance as far as monetary policy is concerned.
We are in that dead zone of few earnings reports and even fewer corporate announcements. We will wait for the end of the month to see how the second quarter played out.
We will be waiting for the JOBS report; we will be waiting for GDP numbers to come out.
So many things to look forward to, yet, I feel, at this point in the economic cycle, we will be disappointed by almost everything.
Let’s start with the Fed. The consensus, and I agree, is that they will do nothing but make for a stronger case for a rate cut later on. No real reason to cut rates at this juncture and even if we get another dismal JOBS report later this month, I still don’t see the need for any rate cut.
The economy is still growing and we are pretty much at full employment. There is no inflation to speak of even with the global trade tariffs.
Things still look damn good and I think the Fed sees that and will not act without more indications of a slowing economy.
It may take months.
The earnings picture I believe will be a little less exciting and could potentially make for a sloppy July. We have seen US corporations exceed projections more than 65% of the time over the last three years and that may be coming to an end.
Even with lower earnings forecasts, it looks like the market may have priced a better earnings environment than forecast and this could mean a choppy downward slopping market.
A correction? Eh, I don’t think so but we definitely will see some stocks pull back to a great investing point and if you believe in the long term success of stocks, it might be a great time to selectively invest in some potential bargains.
For the next two weeks we will have what I like to call a “Flat-line market”.
Small movements above and below a set point on the S&P. Little volatility and little chance for bargain hunting.
My third and final point about the JOBS report may be the thing to truly watch for. I am not going to predict the final numbers for June but I can tell you that as far as the Fed is concerned, it is ultra-important and they will dissect it and probably act accordingly based on those numbers, so we wait.
I am waiting as well.
50% Stocks
25% Fixed Income
25% Cash