Summer Market Lift Underway
Last week saw a lift in the major markets after a significant losing stretch. And experts believe next week could be very strong, perhaps up by 7%.
JP Morgan believes there will be a buying spree of equities driven by quarterly balancing. Combine that with the rising demand of the July 4th holiday launching a busy summer of fun and travel. Oil prices and gasoline prices were down and that has to give a little bit of hope for beleaguered consumers and businesses.
Yet investors and day traders alike who want to benefit from the volatility have to be aware of “saboteurs” who can quickly counteract a positive trend. They could be Fed governors, manipulative politicians, or terrorists launching rockets. There is no stability in 2022 markets. With an expected Fed rate hike in July, many are warning we haven’t seen the market bottom as yet.
Economists and stock market forecasters alike are befuddled by market trends and aren’t sure where the markets will be in 3 months or 6 months from now. Politicians and the media will try to push their own scenarios, one being a $50 a barrel of oil.
Should you be buying commodities stocks, oil stocks, or tech stocks? See the best performing stocks in the last 4 weeks below. Oil stocks have taken a beating, which was just a political statement from Biden. With summer travel, prices are going to head back up to $120. Fewer people will invest in oil stocks now, and oil companies will not be investing in billion dollar infrastructure to help Biden.
This can’t happen of course with supply shortages and rising demand. President Biden is being quiet on Russia’s continued revenue flows, and India and China buying up cheap oil from Russia, even at the risk of being sanctioned. Europe is cutting Russian oil flows and will likely complain about India and China’s actions. That could push oil right back up to $120.
In a political gambit, Joe Biden and the Fed are believing they can jack up interest rates and avoid a recession. Experts such as Larry Summers suggest a recession is very likely.
The DOW, NASDAQ and S&P have seen 30% drops year to date. With another rate hike, we could see inflation touch 10% in July and push the economy toward the brink. That’s stagflation.
May’s CPI index rose a full percentage point in May year over year (highest May in 17 years) and has hit 8.6% which is above April’s number of 8.5%.
It appears the rising costs of money, housing, fuel, food, transportation and just about everything is not going to fall easily and for some time. The FED and Biden may try to get aggressive with rates but it likely won’t work — it doesn’t fix the shortages of supply. What can save the economy is more competition and supply, and governments don’t support that scenario.
The S&P, Dow, and NASDAQ whip sawed last week after a long 7 week losing streak. Investors are skittish, overreacting to predictable news which really doesn’t affect the 3 month or 6 month forecasts. Some experts say supply chain issues are being resolved and China is reportedly easing its Covid shutdown. China’s growing demands will reinflate prices.
July August September Outlook? Rocky Road Ahead in September
We’re likely in for a little bit of warm, sunny period in June, July, and August, but will be volatile for sure. Despite this summertime recovery, the matter is in the hands of politicians, who are concerned about the mid term elections. This will start to color everything they do and state.
Against all the negativity, a big election landslide win for the Republicans could change the outlook for investors. It is significant, because the Republicans could lower taxes, increase energy supply and reverse the Dems economy damaging policies. It all depends on how much power they have against a much weakened Biden admin. We could avoid this much predicted newest recession and bubble burst if Republicans can create power in November.
At the very least, the Biden impeachment will seriously reduce the Democrat’s ability to undermine the economy.
3 Month, 6 Month and 5 Year Forecasts
Recession Indicators Glowing Stronger
Rising energy costs, discouraged US companies, huge debt, and rising rates has everyone bummed out. After the next 3 month period, we could be headed down strongly into a deep dark period 6 months from now.
Ethan Harris, head of global economics research at Bank of America Corp. “We’re either going to have a weak economy or a recession.” — TBS News Report
Jamie Dimon of JP Morgan said there’s a 66% likelihood the U.S. is headed into a mild recession or something even worse.
“We put the odds that the economy will suffer a downturn beginning in the next 12 months at one in three with uncomfortable near-even odds of a recession in the next 24 months,” said Moody’s Analytics chief economist Mark Zandi said in a May 16 note — Washington Post.
These economists aren’t the only one’s as more predictions of late are increasingly negative.
Higher Interest Rates Can’t Control Inflation
The cure for high inflation is more competition, more supply, and less regulations. High rates fuel higher housing costs and higher credit costs which exacerbates the situation for consumers, farmers, manufacturers, builders, and producers since most finance their operations via credit. Higher costs have to be passed onto the consumer.
The key thought now is that the current US government has minimal tools to fight inflation. They built a system that is failing. Some experts are saying that inducing a recession is their only route left.
Consumer’s are not in a happy mood. There is little to ease inflationary pressures, except a recession.
Investors may want shy away from next weeks stocks, next months and even the 3 month outlook and find stocks to hedge against a recession. Make your new stock investing plan based on the 5 year forecast or even 10 year forecast.
Bear Market Territory
Jim Cramer of CNBC was making comparison’s to previous crashes so that’s not good conversation. There is no talking down oil prices for long as the global economy starts moving again and rising interest rates suggest a slide and some fear a looming market crash in 2023. The 3 month forecast shows clearly that the slide that is not over. If you’re buying now to hold on for 5 years, then you should be fine.
The rise of the US Dollar is due to a flight of investors, who are selling off to wait for the market to return.
Lael Brainard, usually a more dovish policymaker, said she expected “a combination of rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a more neutral position later this year. Further tightening would follow as needed” — from CNBC report.
Current Major Indexes (as of June 26)
- S&P 500 : 3,906 ↑
- Dow Jones 30 : 31,105 ↑
- Nasdaq : 12,112 ↑
- Russell 2000 : 1758 ↑
- WTI Crude Oil : $106.36 per barrel ↑
- Gold : $1,835 per ounce ↓
- US Dollar : $104.02 ↓
The market selloff across the world is making the US greenback a popular choice. The greenback is bolstered by expected interest rate rises, as inflation may not be cooling off for some time. Is the US dollar still a safe haven?
Trading Views sector watch shows some interesting possibilities in producer manufacturing. The 3 month performance was outstanding and with global supplies cut, US companies will become businesses go to source in 2022. US manufacturing GDP is well down from last year, so what will a full economic reopening along with lower imports do for US producers?
Despite being neglected, the US energy sector will continue to perform very well. The US dollar is up too, generating higher revenues for US exports.
Expert Forecasters Projected Excellent Growth
Brad McMillan CIO of the Commonwealth Financial Network is projecting 7.5% nominal economic growth and 3.5% real economic growth in 2022. That projection is bullish and the summer season will help, but full year will likely not make it. However, the inflation problem is not transitory and it looks like the only tool Biden has to deal with it now, is to raise rates. That creates a likely US recession including a harder landing than many expect.
The tech sell off always happens when interest rates rise and inflation continues. Tech stocks were dumped on as the talk is about inflation and rising rates rises. See more on the best stocks to buy.
Forecasts for the S&P
Bank of America forecasts the S&P will be flat next year rising only to 4600, however it’s already hit a record of 4799 during a dark moment. On the other hand Goldman Sachs’ predicts the S&P 500 will rise to 5,100 (+12%) by the end of 2022. BMO feels it could reach 5300. That’s well down from 21% growth during 2021. JPMorgan is projecting a 10% S&P gain to 5,050. Morgan Stanley is predicting an S&P drop from 4500 now to 4400 in 12 months. All these forecasts are likely to be downgraded further.
Forecasts are made more difficult due to high market volatility. The volatility is near term and due to rate hikes, oil supply, Fed intentions, and inflation rate announcements. When bad news hits, it tends to take everyone out now. More investors are very skittish, and realizing the 30% hit they’ve taken this year could increase to 50% loss. Will they start buying gold?
Market Forecast for This Week
Last week brought both anxiety and discouragement to the markets. With Covid 19 fading, people are feeling good and they are spending their savings. Yet markets are forward looking with many eyeballing the 3 to 6 month forecast. The 5 year and 10 year forecasts are better because we’ll be out of this period and more firmly into the deglobalization era with abundant energy supplies.
Best Performing Stocks
Top Losing Stocks
Health, biotech, and other speculative stocks were hit hard again, and it’s been a repetitive fact for the last year. Investors in these stocks might be dreamers who may end up losing their savings. Time to abandon ESG and other high cost dreamer stocks and into practical winners — oil stocks. The numbers provided by barchart don’t lie.
Most investors want high growth stocks but it seems they’re taking a beating right now. This is where the buy the dip opportunity comes in. Smart investors are experts at buying the dip and many are waiting for May and June for profits to get rolling in again. On a positive note, the travel market is heating up. Some travel stocks are worth a look, however they pale in comparison to energy stocks.
Top Recommended Stocks This Week
Looking for the latest stock prices and best stocks to buy for next week? Energy stocks will be the darlings again, and despite political tactics to manipulate prices. Limited oil supplies and refinery limitations will be driving prices back to new records. An active hurricane season hasn’t been priced in. Electricity utilities are seeing huge price hikes too.
Projections of oil prices are up to $140 a barrel now because of supply shortages (exploration and drilling were discouraged/prevented in the US) so that political choice is coming home to roost this year. Look at Highpeak Energy Inc, Southwestern Energy, Athabasca Oil Corp, Exxon, Marathon, and any of the best Canadian oil stocks.
Forecasts 3 Months to 10 Years
If the US government and GOP stay calm, we’ll only suffer a slow 3 month period this spring and then back to moderate races for the next 6 months, next 5 years and next 10 years. Remember, if the Republicans win the November elections, they will likely lower taxes which will stimulate the economy and business sentiment. This could prevent a stock market crash and a housing market crash in 2023.
Stock Market Crash Possibilities
Combine the unsettled activity this week with lower consumer confidence, debt ceiling issues, war, persistent inflation, high energy prices, out of reach housing prices, fears of rising interest rates, reduced Fed spending, and a prolonged pandemic slowdown, and you can understand why markets might sag. The wind is definitely out of the sales and consumer intent is not strong.
However, predictions still say 2022 will be a good year. The pandemic ruined the 2019 party, but it will disappear globally late. There still is time buy this dip and find the best stocks to buy. Check out the Dow Jones, S&P, and NASDAQ posts for opportunities, and discover more about Bitcoin, Tesla, Apple, Oil stocks, and the 2022 best picks page for more great stocks to buy. Meta is a washout and may never recover.
Although markets sprung back from the recent dip, there is plenty more volatility coming in the next 6 months. October is often a bad month, but again, it creates buying opportunities. So, for smart investors, it’s more like a feast!
What are the Biggest Threats to the Stock Market?
Stock market investors and those invested in real estate stocks are trying to visualize the key threats that might cause a lot of pain. If you read the stock market crash report, you’ll get a good look at all the crash signals and factors that may lead to big investment losses. Pay attention to those stocks that might be good hedges against a correction or downturn and which securities you should not buy.
Will There Be a Stock Market Crash?
Within a realistic outlook, a stock market crash seems unlikely, however you should still be up on all the factors as they change and combine to present threats to the markets. Choosing stocks that will survive a crash is good and you should know more how to hedge a crash as smart management of your IRA, 401k or RRSP.
Predictions: As for today and tomorrow, next 3 months, next 6 months, or next year, the outlook is positive but maybe not to the satisfaction of some investors. With such bubbly activity, the worry is a high speed wobble (volatility) and a crash of the stock markets, and perhaps even crashing the housing market. This turbulence will reach the housing market and encourage homeowners to sell their house fast.
Retail sales rose only .9% in April, so it looks like the great overheating is overdone. GDP for the first quarter was down 1.4%. However, according to BEA, personal income increased$268.0 billion in the first quarter and disposable personal income increased $216.6 billion, or 4.8 percent, compared with .4% from the previous last quarter of 2021. But will consumers save the stock market and economy in 2021?
I said there was a lot of phoniness in this market with Tesla, Bitcoin, Dogecoin, AMC and other stocks flying high. Now in May, it looks like this was very accurate.
Which are the best stocks to buy today/tomorrow or in the next 6 to 9 months? Which will be hottest stocks during the coming fall season? There are other stocks not reflected in today’s hot Wtd Alphas but will perform well in 2022.
Inflation a Continuous Threat?
Governing politicians and other “experts” told us inflation is transitory. However the charts tell us it is more persistent. They got that very wrong and therefore are unreliable as credible forecasters.
As I said during the pandemic, trillions in government spending and low interest rates continuing, along with supply chain bottlenecks, is a fertile ground for record breaking inflation. And here we are now with 8.6% inflation. Yet with EU sanctions on Russian oil, we might see inflation push upward toward 10% in July.
You should be hedging your investments with good stock selection. Charlie Munger says diversification is for idiots. Pick the best horses to win. Everyone seems to believe inflation is going to be an issue for the economy and for listed companies. Here’s a few stocks CNBC/Insider Monkey believes will weather the inflation storm:
- Newmont Corporation (NYSE: NEM)
- AT&T Inc. (NYSE: T)
- Medical Properties Trust, Inc. (NYSE: MPW)
- Dollar General Corporation (NYSE: DG)
- Activision Blizzard, Inc. (NASDAQ: ATVI)
- Etsy, Inc. (NASDAQ: ETSY)
- Philip Morris International Inc. (NYSE: PM)
- Oracle Corporation (NYSE: ORCL)
- Colgate-Palmolive Company (NYSE: CL)
- Adobe Inc. (NASDAQ: ADBE)
- The Procter & Gamble Company (NYSE: PG)
- Aspen Aerogels, Inc. (NYSE: ASPN)
- Zoetis Inc. (NYSE: ZTS)
Factors affecting the Stock Market
- economy had a meager showing in the last 6 months, GDP shrunk in last quarter
- inflation rises rapidly and will persist despite Fed rate increases
- rising rates are discouraging lending and investment
- bond and treasury rates will may money out of equities (5 year outlook)
- US dollar rising fast which hurts US exports
- summer season pushes demand for travel, gasoline, and food even higher
- rent prices rising putting extreme pressure on American consumers
- markets sagging with increased volatility which scares off investors
- price earnings ratios suggest stocks are grossly overpriced
- Fed said they wouldn’t raise rates until 2023 but that’s changed
- $5 trillion sitting in money markets and where will it go (oil and energy stocks?)
- Oil prices rising which means higher gasoline prices and transportation and manufacturing costs
- S&P, and Dow Jones, NASDAQ and Russell 2000 still have room to grow
- jobs reports okay but not great
5 Year Long Term Forecast is Optimistic
Just a little discussions on the 5 year stock market forecast (and 5 year housing market forecast ) look really good too because the American consumer is well employed as business is rebuilt from the ground up. The ten year outlook is more clouded, but millennials will need products for some time. Then intent to buy homes remains strong and construction rates will grow fast through the coming spring as labor and supply shortages ease.
The latest US jobs report is good. The 2022 to 2027 5 year projections are not priced into the market, but instead are focused on current earnings/sales and wishful thinking over the 5 year term.
Bank and Broker Forecasts
Goldman Sachs is forecasting recessionary numbers with a new GDP growth projection of a weak 1.75% with a 35% chance of a recession.
Final thought? 2022 looks really good, but if global markets crash due to lingering Covid infections, a stock market crash and housing market crash would be simultaneous. Optimism is a great catalyst, but you can see how periodic reality reaches the investor masses once in a while. Let’s cross our fingers for smooth sailing ahead.
See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento. See stats on other cities, including Denver, Dallas, New York, Boston, Atlanta and in the Florida housing market in Miami and Tampa. Visit Linkedin if you’re seeking advanced SEO and real estate marketing services for Fintech or Real estate firms.
Rising mortgage rates, inflation, reduced housing supply and high home prices threaten the markets, it appears 2002’s real estate scene will stay strong. Realtors may want to build their presence this year as house prices decline in 2023. Lower prices will bring plenty of homes onto the market and boost your opportunities.