TCRT-PGEN Fundamental & Technical Discussion Board - PCE came in a little lower than expected. That is good but it's still not where it needs to be - TCRT-PGEN Fundamental & Technical Discussion Board - InvestorVillage


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Msg  28408 of 29027  at  6/30/2022 10:10:40 AM  by

kcchris


PCE came in a little lower than expected. That is good but it's still not where it needs to be

The numbers seem to reflect that the economy is going into recession or is there already.  Consumer spending is up .02% while inflation is higher indicating that consumers are spending less than the prior month.  Savings rates are up a little.  consumers are worried and spending less and what they are buying is costing more.  
 
This is likely going to appear in the earnings reports of companies for the quarter and that is starting next week.  This will lead to very few upside surprises and many downside surprises.  Most likely guidance for future quarters will be revised lower.  
 
My expectation is that the Fed may decide to only increase .50 basis points when they see the economy slowing.  But they will likely still increase 75 basis points in July.  I do think future increase expectations may be lowered as the economy slows faster than expected.
 
Housing is already beginning slow and the pace of new sales will be a trickle compared to the last 12 months.  No one will leave a 3% mortgage to move to a new home with a 6% mortgage.  So I would expect the housing boom has ended and that will ripple through the economy pretty fast.  It moves to many other sectors.  Lower job growth, less sales for building supplies. The inflation in the housing market and at home depot will end pretty fast as inventories grow and sales slow. 
 
As we get closer to the mid terms and the economy is going into recession I am anticipating Biden reversing course as nearly every democrat will put tremendous pressure to change his energy policy.  As we sit today the dems will get killed in the elections and the Republicans will take control of the house and likely the senate.  As a result the green new deal will likely be put on the back shelf and Biden will start to reverse course on our energy policy encouraging drilling everywhere.  Hopefully assuring the industry his war on fossil fuels is over.   The minute he does this the price per barrel will start to fall.  Hopefully back to levels under $100 and maybe down to $75 a barrel. 
 
If they reverse the energy policies and the rates are high enough to put us into a recession I would expect the Fed to reverse course and the stock market to start to soar.  That could happen in the 4th quarter or 1st qtr of 2023.  I have been in cash other than TCRT since last summer.  I will be going all in at some point in late 3rd qtr. 
 
I think we have 3-4 more down months and then we start heading up again.  The market may fall based on earnings and guidance to the 25,000-27,000 range.  But that is likely to lower end.  When that happens there will be an opportunity to see a 30-40% increase in stocks over the following couple years. 
 
Buy when others are scared.  We are getting close to that point.  The country has a lot of issues.  let's hope we can dig our way out of this.  I am more worried about the higher interest cost on the national debt.  I think the Fed wants to keep rates low because the govt can't afford to pay a higher rate on it's debt.  If rates stay at 3% or more the interest cost would be in the $1 trillion dollar range annually.  That would cause a real need to raise taxes and keep the spiral down.  Let's hope that interest rates can fall in the nex12 months before much of our debt is refinanced.
 
 
 
 


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Msg # Subject Author Recs Date Posted
28413 Re: PCE came in a little lower than expected. That is good but it's still not where it needs to be Eatsmelts 4 6/30/2022 12:36:56 PM




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