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Inflation Worries Fade as Delta Variant Surges Since our last update, stocks have drifted somewhat erratically from their highs of two weeks ago. It’s been nothing dramatic, with the S&P 500 and NASDAQ currently off a bit more than 2% from their record highs. A look at the internals of the indexes reveals a divergence among market sectors such as we’ve seen with the several “stealth” corrections of this year. For the trailing 4 weeks Financials, Health Care, Staples, Industrials,…

The Fed Offers a Clue to Policy Timing The star of last week’s Jackson Hole Economic Symposium was Fed Chairman Jerome Powell. He offered guidance as to the Board’s policy response to the ongoing recovery and the inflation attendant to it. Indications are that the Fed will begin to reduce bond purchases before year end. We noted in our most recent Update that, in effect, the economy was reaching the point of not needing life support in the form of…

Perspective on Taper Talk Following last week’s series of new record highs for the major averages, investors have now turned their focus to news of slowing retail sales and the spread of the Delta Variant. The general view is that consumers have bought all the “stuff” they want and are now moving on to buying experiences. That might explain Amazon’s recent descent into correction territory. However, the travel and hospitality stocks aren’t responding yet to that general view and are…

A Brief Time Out for a Client Service Announcement Following the sharp, one-day selloff of more than 3% that we saw in the last week of July, the market has soldiered on these past two weeks to routinely set new record highs. That decline left some traders who sold licking their wounds while most diversified investors who stuck with their positions have enjoyed watching their portfolios swell to record proportions. We’ve been fielding comments from clients regarding those values and,…

A Whipsaw Week for Traders Last week’s shallow decline of the major averages culminated in a dramatic selloff of the broad market this past Monday. It was prompted by news of the accelerating spread of the Delta Variant just as the reopening was gaining momentum. That day also brought a steep decline in the 10-year bond yield that had some heads exploding on CNBC as experts pondered whether we were seeing the start of a correction, or worse, and a…

The Market Pendulum Swings on Conflicting Narratives Just as the first half of the year marked a significant shift of investor capital away from the Growth stocks and into the Cyclicals, Q3 is shaping up as a potential unwinding of that shift. For months, the inflation narrative dampened traders’ enthusiasm for the big-cap Growth favorites of the past year. That narrative has faded under the weight of an abrupt decline in treasury bond rates and a flattening of the yield…

Perspective on a Hot Topic: Inflation Should we be worried about inflation? That’s the question that comes to mind when hearing predictions from some experts who suggest the Fed is courting disaster by delaying a policy response to recent inflation data. It’s the subject du jour in the financial media during the current news void leading up to next month’s earnings season. Prognostications of Doom always sell advertising. So, should you be worried? Well, “It depends”. If you own financial…

A Shadow Correction Lurks Within This Rotation As we head into the long holiday weekend, stocks have meandered within a narrow trading range for the past week. A memorable and impressive earnings season has given rise to speculation over whether we’re seeing “peak” fundamentals for this economic cycle. (Not yet) The inflation debate continues and will apparently persist until the Fed announces a change of course. (Don’t hold your breath) That’s likely to be at least a quarter or two…

Fiscal Policy Changes Appear on the Horizon It’s been an eventful month of April. We saw the government embark on a spending spree while the private sector reveled in a blockbuster Earnings Season. The $1.8 trillion American Families Plan has been announced. It follows the American Rescue and American Infrastructure Plans. The tab? Nearly $6 trillion at first glance. Of that, the latest iteration of government benevolence opened at $1.8 trillion, paid for by tax increases on corporations and as…