I am making this commentary on June 8th 2023. I mention this because today could be the day we begin a new Bull Market. The S&P 500 is trading at 4287 as I write this letter. Should the S & P close above 4,293 the market would be up 20% from the lows which historically has been the signal the new uptrend is upon us. At the first of the year I commented I thought markets would consolidate and get ready for a positive 2nd half. This appears to be setting up well.
Most pundits believe interest rates have peaked as has the rate of inflation. Last year at this time the Federal Reserve was raising short term rate .5% at each meeting. This is they are down to .25% and most believe the next meeting will show no increase.
Inflation, as measured by the Consumer Price Index has fallen from an increase of 9.1% last June to 4.9% last month.
As year ago crude oil was over $120 per barrel. Today, Saudi Arabia is lowering their production as oil falls below $70 a barrel.
Housing prices have fallen over the past 12 months as measured by the Case-Schiller Index. However, the decline has begun to slow and even reverse as mortgage rates appear to have peaked and move lower.
Finally, the earnings reports have been better than expected. If a Recession does occur it is likely to be mild.
So, I am going to put a little more wind in the sails. Bonds could be a good buy as rates look lower. And stocks are trading as if the trend will be higher. I say could, not only for compliance reasons, but also because markets are fickle.
All My Best,
John Heil
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