The Dow Jones Industrial Average fell more than 1,000 points last Friday, caused apparently by Fed Chairman Jerome Powell’s attempt to use a brief speech to channel the ghost of Paul Volcker. Obviously, this was part of the market’s worries, but the stage was set when the Biden Administration announced a student loan forgiveness program last week. The more we learn about this, the worse it looks. The executive order would send an already very bad student loan system – a system designed mo… View More
Consistent with the frenetic pace of modern life, a technology-inspired need to achieve instant gratification, and virtually endless amounts of free money, it is difficult for all of us as investors to have the patience to allow economic developments to play out over time. In our defense, who could blame us? Fed tightening in late 2018 led to a brutal sell-off in stocks before Christmas. Two weeks later, Chairman Powell might as well have brought chocolate and flowers to the floor of the New Yor… View More
Equities were sharply lower last week with the S&P -4.0%, its worst week in ten. Friday’s Fed Chair Powell’s Jackson Hole speech was the catalyst for the significant Friday decline as he signaled that the Fed is willing to risk recession to lower inflation. Best performers were energy (+4.3%), materials (-1.3%) and utilities (-2.6%). Worst sectors were technology (-5.6%), communication services (-4.8%) and consumer discretionary (-4.7%). We recognize that we send out a lot of material. … View More
Equities declined last week (S&P 500 -1.2%) with the bulk of the decline coming toward the end of the week. The decline came after four straight weeks of gain. Downside occurred due to Fed commentary indicating determination to fight inflation and therefore more rate increases. Downward earnings revisions and stretched valuations were also of concern. Best sectors were consumer staples (+2.0%), utilities (+1.3%) and energy (+1.3%). Biggest decliners included communication services (-3.3%), m… View More
Second Quarter Earnings Better Than Expected In Aggregate… With over 90% of companies reporting earnings for the second quarter, aggregate EPS growth of 9.7% for the S&P 500 is well above the original estimates of 5.6%. The energy sector provided a significant boost; however, 8 of the remaining ten sectors also beat their initial estimates. In addition, revenue growth of 13.7% was also better than expected. …But 2023 Earnings Per Share Estimate Being Revised Lower In our opinion, th… View More