What to Expect in the Stock Market May 16-20
Breathe In, Breathe Out
The inflation report was released last week and it was not great but not horrible either. It was kind of like going to McDonald's, you do it when you have no other options and just need sustenance. The report definitely did not help the markets at all. Stocks continued to fall all of last week. The S&P 500 is getting closer to a crash after falling more than 18% over the year.
However, this is not a bad thing as Blair Duquesnay says
What we are experiencing in financial markets right now is akin to the cleansing feature of a forest fire. Fire does a lot of damage, but it serves a vital purpose for the future viability of the ecosystem. Organisms that were trapped under dry, dead debris will be able to make it to the surface again and grow. The nutrients from that fire will fertilize the soil below.
So no need to freak out, I am using this chance to continue buying HEAVILY! I have bought stocks every single week since the crash got heavy in April (I mean it's only like $50-$100 a week). I am trying to find other means to make more money so I can invest EVEN MORE!!
Market Returns Last Week:
BUT a word of caution.
As excited as I may be about buying stocks, I want to encourage everyone to take care of the most important things first. IF you do not have an EMERGENCY FUND, PLEASE GET THAT THING IN PLACE!!
I have no idea what the future holds but there is too many signs pointing towards a possible (I hate myself for saying it) RECESSION. In the world I pay the most attention to which is engineering, I am seeing many different companies begin to pull back on their hiring of engineers. THIS DOES NOT HAPPEN unless companies are in a REAL BIND!
Facebook (Meta) has a hiring freeze for engineers
Uber just announced something similar
Amazon after giving crazy salaries last year is saying they are "overstaffed"
Carvana is cutting its labor by 12%
Robinhood cutting its labor by 9%
Netflix laid off dozens of employees and is holding back on hiring
Regularly hearing about Start-Ups having to reduce their workforce
With inflation remaining high and interest rates going up. There is no more free money in the system. Making it harder, especially for unprofitable businesses to continue running operations. Venture Capital Funds no longer want to hear the word "disruptor" and are not funding companies.
This is usually how things begin to fall apart, weak businesses get killed then it slowly spreads. I have no idea if we will actually enter a recession. But I want us to be ready for ANYTHING. As the saying goes, Hope for the best but PREPARE for the WORST!
So get prepared by having that Emergency Fund.
I HATE HATE that I sound like a doomsday person. However, I cannot just ignore what I am reading and seeing around me. Wishing everyone the best of luck.
Tale of the Tape
Inflation continues to outpace everyone's expectations. For April, inflation came in at 8.3% which is higher than the 8.1% expected but lower than March's 8.5%. The big issue with this inflation number is that inflation is beginning to flow from goods into services. Core inflation which removes volatile items like gas and food actually increased from March to April. Things like airline tickets (up 19% year over year), rent, and other recreational costs increased.
More and more people are worried about rising prices which can cause a deadly spiral. Leading to inflation getting out of control because people expect inflation to remain high.
The Fed for its part is doing whatever it can to get things back under control as Fed Governor Chris Waller said, "At this point, I don’t care what the reasons are. Inflation is too high and my job is to get it down".
My takeaway: EVERYONE STOP BUYING STUFF!! If people slowed down on spending then businesses would have an opportunity to play catch up. But as we know the American superpower is to SPEND! As Axios' Neil Irwin writes:
"Financially flush consumers are ready to spend whatever it takes to book their vacations and business travel. Limited supply plus strong demand = booming prices."
IN other words, we are our own worst nightmare
Random Interesting Facts
I just saw my new phone, smartwatch, and wireless earbuds. On Wednesday last week, Google had their I/O event where usually they announce a bunch of software updates but this time they decided to bring out the big guns. They revealed a bunch of new hardware coming out later this year and early next year (and some items that might never get released cause Google).
The best thing they showed off was a pair of Augmented Reality glasses that can translate any language as someone is speaking to you
They also announced improvements to Google Wallet, where you can add your driver's license to it! FINALLY!!!
I gotta wait for the reviews on the Phone, smartwatch, and earbuds but more than likely I will be getting all 3 of them.
Plus I still need a new laptop, and a whole office to set up
DAYUM!! Its gonna be an expensive Christmas Season
RIP all my accounts😢
WE finally have a picture of what an actual Black Hole looks like. The image above was released by Event Horizon Telescope's research team. This is the Black Hole that is at the center of our lovely Milky Way (galaxy we exist in). Apparently taking a picture of a black hole is about as easy as getting a 5 year to stay still after eating a bunch of cake. Some stats on Sagittarius A (name of the Black Hole):
It is 4 million times bigger than the Sun
It is 26,000 light-years away from Earth
Thankfully it will not eat us. It survives on a near-starvation diet of galactic material
Basically, it would be like me eating one grape every million years or so
So we are safe
The coolest part of this finding is the confirmation that Einstein's theory of relativity was correct.
I am tired of this story and kinda tired of the roller coaster storm known as Elon Musk
All the stores that regularly take my money will be reporting earnings this week. Walmart, Target, Home Depot, and Lowe's are all reporting earnings this week. Walmart and Home Depot kick things off on Tuesday, followed by Lowe's and Target on Wednesday.
It is expected that all retailers will announce nice increases in sales despite higher inflation costs. It will be interesting to learn what people are choosing to spend money on within each store. Home Depot and Lowe's will be facing the most challenge. Although the housing market has continued to surge, it does not mean consumers are as excited to spend on upgrades as they were during the pandemic.
Speaking of housing, we get more housing data this week that will tell us how much Millennials can no longer afford a home. With rising mortgage rates, there has been declining affordability for most buyers. So much so people are looking towards Adjustable Rate Mortages to get some level of savings. Hopefully, we hit a peak in home prices soon.
Unnecessary Man U Update
Is the season over yet?
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all