Circling the Wagons
Investors are increasingly choosing to circle the wagons as it becomes apparent that the Federal Reserve will not be making multiple interest rate cuts this year, indeed this author predicts the next move is up.
As earning season kicks off, early indications show that misses are punished with death and even solid beats can result in a selloff. Why? Growth is paramount, and any indication of weakness is an excuse to sell.
Hyperinflation is starting to cause significant cracks in the economy, notably in the energy and food sectors where high prices are causing many Americans to make hard choices. Those unwilling or unable to take on a second or third job to makes end meet are particularly vulnerable.
For now, the stock market has stalled out and investors are looking toward the coming earning season to parse out winners and losers and adjust their portfolios accordingly. Sharp swings in share prices should present those with a longer time horizon with meaningful buying opportunities.
Historically, the adage has been to "Sell in May and Go Away" for the past 100+ years. Seasonality combined with a jittery consumer battling hyperinflation may lend significant credence to this old philosophy. When it is hard to see the upside, and you face danger on multiple fronts. sometimes it makes sense to circle the wagons.
