CJ Updates

Mission Accomplished For the Fed: A Slowing Economy A component of last Friday’s inflation report came in higher than we had expected. The CPI headline number increased to its highest level in 40 years. However, that was only part of the story. The core inflation rate, excluding food and energy prices, actually posted a downtick for the third consecutive month. That was matched this week by a third straight downtick in wholesale price growth as expressed by the core PPI…

Bear Market? Yes. Recession? Not So Fast. Last Friday, we declared a bear market for the S&P 500. We based that on its intra-day low of 3810, marking an almost 21% decline from its high. From there it pushed higher to close the day at 3901, just shy of what has been deemed to be an “official” bear market. In the past we’ve adhered to conventional thinking that requires a close beyond the 20% threshold to earn that label. Given…

The Bear Market Box Has Been Checked Traders and investors took a breather Monday after last week’s market tumble to a new post-pandemic low. Volume was light, the indexes mixed, and generally flat. Tuesday’s rally was erased the following day with frenzied selling and the year’s biggest one-day decline of the S&P 500. The breadth of that dive points to forced selling in the stock market. That’s where borrowers on margin and pledged equity lines of credit are required to…

Inflation Data Offers a Hint of Trend Change Those expecting any relief in May from last month’s market decline have, so far, been disappointed. With the exception of one notable rally prior to today’s, the indexes persisted in their downward march to Thursday’s post-pandemic lows. Yesterday’s close left the NASDAQ off 31% from its November record high. That’s well beyond the bear market threshold of 20% that the S&P 500 is flirting with at -19%. The DOW remains the leading…

Traders Take the Market for a Spin It was a busy week, especially for traders who can’t resist betting on news of the moment. That news included the FOMC announcement, on Wednesday, of a hike of the Fed Funds rate by 50bp. At the press conference that followed, Chairman Powell clarified the Board’s perspective and laid out its strategy for the coming months. In doing so, he cautioned that the Fed, with its tools, couldn’t craft a remedy for what…

Inflation Fight Weighs on the Economy and the Markets In Q1 of this year, we witnessed the movement of capital among sectors within the market as traders traded and investors rebalanced portfolios. The predicted result was a contraction of P/E multiples among some high-profile NASDAQ stocks and superior price performance from a number of value/income issues within the DOW and S&P 500. Last week, the P/E compression of the NASDAQ widened to include most, and on some days all, sectors…

Event Risk Overtakes Cyclical Risk Investor sentiment took a hit this week as the Russian incursion into the eastern regions of the Ukraine became a full-scale invasion. The capital, Kyiv, came under siege along with several other major cities in the country’s interior as a miles-long Russian convoy snaked its way westward. What was thought to be a brief, localized outbreak of hostilities as a prelude to a negotiated settlement regarding the separatist controlled states was in actuality a planned…

Geopolitical Tensions Grab the Headlines Inflation and the Fed retreated from the headlines as all eyes focused on Russia’s militaryincursion into the Ukraine Thursday morning. At first glance, that aggression presents thepotential to upset political and economic stability on a global scale. After taking acloser look, that appears unlikely. The stock market embraced the worst-case scenarioearly in Thursday’s trading session as we saw the DOW join the NASDAQ and S&P 500 incorrection territory as they posted their year-to-date lows in…

Inflation Headlines Weigh on Stock Prices As you might expect, the Fed’s recent announcement generated an abundance of speculative headlines andopinions from market watchers that served as a catalyst for the recent drawdown in stock prices. Bydrawdown we mean a not-so-surprising correction for the NASDAQ and the S&P 500, down 17% and 12%at their respective lows. At the same time, we saw the small-cap Russell 2000 slide into bear marketterritory, down 21% at its recent low. The DOW was resilient,…