As a subscriber, you are well aware of our position of good news being bad news – and vice versa. What we’re speaking about is the employment situation. In June the overall employment was 2.5% above where it was prior to the pandemic (February 2020) and private payrolls were up 3.1% according to TLR Analytics. This Wednesday the Consumer Price Index (CPI) for June will be made available. We suspect that the core CPI will see a year-over-year increase of 5%, however overall, the index would see a 3.1% gain. Because of the continued strength in the labor market, we are forecasting a rate hike later this month of ¼%. This would see the Fed Fund rate push to 5.5% - the rate we had forecast last fall.
The Federal Reserve has continued to stick to their target inflation rate of 2% and indeed, the inflation rate has lowered considerably since spring of 2022 when I stood at 9.1%. Today the rate of inflation hovers at 4.05% down from 4.93% last month.
The holiday shortened week ended on a downward trend and although the Labor Department’s payroll report came in lower than was had been forecast, it still remains strong and this was enough of a concern for investors to predict an interest rate hike, again, something we’ve broadcast repeatedly for weeks.
The DJIA ended the week at 33,784 down 1.6% by weeks end. The S&P 500 ended trading Friday at 4,398 down 0.6% while the NASDAQ finished at 13,660 down 0.6% for the week as well.
While the economy is showing stronger than expected strength, there remains fear of a recession by year end. The fear of declining household savings is leading many economists to believe that a slowdown in spending will cause this downturn. Mortgage rates increased this week as well due to the perception that interest rates will increase at the next Fed meeting (7/26/23) landing at a national rate of 6.81%.
Although Small Caps finished lower for the week (- 1.37%) they are still showing a degree of strength which, as our readers have read, is important for any sustained market advance.
The Volatility Index (VIX) continues to bear witness that there is little fear among investors of a major downturn. The VIX currently is posted at 14.83. Any number below 20 is considered bullish while a number of 30 or above becomes a concern. The VIX at 40 would see a full-blown panic.
The yields on Treasuries continue to point to a recession. You’ll remember that a good barometer of the economy is the Yield Curves offered by Treasuries and we are still seeing the yields inverted – a harbinger of potentially bad news. Currently the yields on 2-year Treasuries are at 4.95%, 5-year 4.36% and 10-year 4.06%.
When we make recommendations, they are based on established strategies that we’ve developed over many years without allowing emotions to cloud those recommendations. We follow a myriad of indicators and based on that research offer suggestions to help our readers and subscribers make better decisions on the best place for their investment dollars at that time.
Markets constantly change and to adhere to the tired advice to ‘just hang in there’ or utilizing the ‘buy and hold’ strategy offered by many, if not most financial professionals, can put not only any gains that were made at risk but the possibility of the loss to the principal amount as well. Our intention is to follow what’s known as ‘the Trend of the Market’ and the only way we know this can be done is to diligently study those indexes, indicators, signals and charts which allow us to form a comprehensive trajectory of the equity markets. But as any investor knows (or has come to find) no one can predict the stock market with 100% accuracy. At GaneWisdom/Market Edge we follow the strategies that have proven helpful to many over the years. We’ve offered our market updates in such a way as to make our advice extremely affordable witch the ‘average’ employee can afford. Instead of our firm initiating market transfers, our service allows you to manage your money on your own – but with a guiding hand from us.
Our current positions:
It is important to note that the following positions have been in place for weeks. Although we are not advocating transfers currently, it may NOT be in your best interest (should you be a new subscriber) to jump into these sectors at the present time due to price increases already realized. We suggest following our weekly market updates and Mid-Week Alerts for any new suggestions and move into (or transfer out of) an investment at that time.
- S&P 500 loaded mutual fund or S&P 500 ETF
- A portfolio consisting of Financial Services.
- a portfolio consisting of Leisure goods and/or services.
- a portfolio consisting of Telecommunications.
Please watch for our Mid-week Market Alerts should there be any.
* As is the case with any investment, use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore, our suggestion is using a portion of your portfolio and not the total in any one fund or subaccount. A portion should remain in Cash (Money Markets)[/restrict]
Mid Week Market Alert for Wednesday July 12th, 2023
We are issuing a BUY signal for those whose portfolios include Small Cap stocks or those invested in the Russell 2000. Money should be transferred into this portfolio by the close of business on 7/12/23.
As is the case with any investment use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore our suggestion is using a modest portion of your portfolio and not the total.