12:00 TUESDAY – Stock Market Report #207 – 5/9/23
by Robert Holman | www.DefensiveAdvisor.com
STOCK MARKET RATING … 4.0 (0-4 bearish, 5 neutral, 6-10 bullish).
We got the Fed interest rate decision on Wednesday, May 3rd and tomorrow May 10 we get the CPI. The market is very tired of all the negative news (higher rates, lower corporate profits, inflation, banking worries, upcoming recession) and seems to want to react (or over-react) positively to any news that is even slightly favorable. For example, Friday’s moderate jobs report sent the market up 500 points.
So, in recognition of the bullish sentiment displayed Friday, I’ve raised my rating from 3.5 to 4.0. Yet I’m concerned that the market may not understand or believe the Fed’s obvious determination to keep raising rates until inflation cracks significantly (below 4% in my view). Inflation is “sticky” and usually takes a very long time to recede below 2%.
Many of you are concerned with the banking situation. There are 2 types of highly significant bank problems – liquidity risks (possible risk of insufficient cash, if there are mass withdrawals) and capital risks (possible risk of cash losses, if they have to sell securities). Regional banks tend to fall into either one of these two categories from time to time, because they have less diversification opportunities than large banks. Only one large regional bank fell into both categories, and that was First Republic which recently closed and was acquired.
The First Republic failure was more-or-less expected, and for now, the banking situation is calmer.
But, of course, commercial real estate is a problem waiting to unfold.
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.
TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018 and are doing better than the market return since that time period.
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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Opinions in this post are for general information only and are not intended to provide specific advice to, or recommendations for any individual, without our complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.