12:00 TUESDAY – Stock Market Report #205 – 4/25/23
by Robert Holman | www.DefensiveAdvisor.com
STOCK MARKET RATING … 3.5 (0-4 bearish, 5 neutral, 6-10 bullish). See below.
We have been moving up for 4-5 weeks since March 13. But, the Federal Reserve’s interest rate decision is coming up on Wednesday, May 3rd. What they say thereafter will be key to what the market does in the short-term. If they pause and give no indication about future rates, we will probably rally.
If they pause and state they will be data dependent, investors will have to rely on their own bullish vs. bearish decisions based upon their own economic forecasts for the next 3-6 months. If the Fed pauses and says they will resume hiking rates if inflation has not moderated significantly in a few months, then we will see the same individual decisions being made. If the Fed says they will keep raising rates because inflation is not declining enough, then we will head down, But, I don’t see the latter scenario as likely, so I don’t see much of a case for a continuing downward market on interest rates.
However, there is a risk to growth due to the possibility of earnings declines as the economy slips into a mild recession from all the rate hikes done in the last 12 months. So, I do see a case for a declining market with this scenario, which I think is now upon us. So, I still lean bearish based on the economy rather than the interest rates increases), with a possible deflection to the Fed if they pause. Let’s see the policy statement next week and go from there.
Inflation is almost always persistent, so the Fed WILL have to raise rates even further. As that view becomes more widely recognized, that is the point that the market will resume it’s downward drift.
Just a short note on my investment philosophy --- I don’t try to PREDICT the FUTURE trends; I try to ADJUST RISK to CURRENT trends. That’s a significant difference.
PORTFOLIOS … After reading this report, if you are unsure how to position your portfolio to take advantage of these conditions, call me to discuss your circumstances, I’ll do a complimentary portfolio evaluation, and I’ll explain what ought to be done to help your situation. If you want to get started right now, just click here and input your portfolio holdings and I’ll call you.
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Excelsior Divitiae. Learn from the Bible: Deuteronomy 10:14 and Psalm 24:1 (taken together), Genesis 12:2-3, Proverbs 15:22, 21:5, 22:3 and 27:12, Ecclesiastes 8:7, Joshua 1:9, Proverbs 3:5-6, Ephesians 1:17, Jeremiah 29:11, 1Chronicles 29:11-13, and 1 Chronicles 12:32. I recommend you read them in this order.
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