What to Expect in The Stock Market This Week (August 16-20)
... Retailers tell us about our shopping habits
The stock market continues it’s amazing recording setting pace of record highs almost every week. Now the question is, Can Man U win the title after winning just one game?
The first W of the season is so SHWEET!!
Oh wait wrong newsletter but Man U is WINNING THE PREMIERSHIP! BOOK IT!!
Now back to your regularly scheduled newsletter.
I present to you the S&P 500 YTD returns. If this is not AMAZING to you, I don’t even know what to say to you
And the Dow Jones isn’t doing so bad either:
But the Nasdaq is falling a bit behind:
Now down to the week ahead.
All eyes will be on retail. Last week, I talked about the Consumer Spending Index, and focused on the importance of those numbers. Well we got those numbers and well people are loosing or have lost confidence. According to Axios’ Courtney Brown
The Delta variant put a massive dent in one measure of consumer sentiment.
A key index saw the sixth-worst decline on record, going back over half a century. (It doesn’t top the drop at the onset of the pandemic, or the fall during the 2008 financial crisis.)
With these numbers in hand, the next question is “How did people spend their money in July?”
Well, you are in luck cause we get Retail Spending numbers on Wednesday. What I am looking for is a slow down in consumer spending. Which will signal to me that people are done paying such high prices. This in turn will allow supply to catch up, (as one of the largest shipping hubs in China had to be shut down due to a Covid-19 outbreak). If supply catches up then we can get a real idea of if inflation is truly transitory. In the end, it is just like they say “The cure for high prices, is high prices.”
However, if you are more pessimistic. This can also be seen as a negative news. This could be a signal to investors and economist as a slowdown in the economy due to inflation*. Which might pressure the Federal Reserve to hold off even longer from tapering their Quantitative Easing. Speaking of the Fed, we get Federal Open Market Committee (FOMC) meeting minutes on interest rates on Wednesday. No one expects them to change their stance on keeping interest rates at 0. However, every finnerd will be listening for the word “taper” to be said at least 3000 times.
*side-note this is what I hate about Economics. The exact same numbers can be defined in so many different ways. Depending on your perspective. Remember Economics is not a science but an art. The engineer in me just loses it every so often.
To continue the theme of Retail Retail Retail:
Two giants of the DOW Jones and Two wanna be Giant will be reporting earnings this week. Home Depot ($HD), Walmart ($WMT), Lowes ($LOW), and Target ($TGT) will give us more insight to those retail numbers and how people are spending. They can also give us an early scoop of trends to expect as the Delta variant is becoming top of mind for most people.
We also get earnings from the beloved Nvidia ($NVDA) as to progress on the chip front as auto manufacturers are beginning for chips or any size. So far auto manufacturers have lost more than $100 billion from chip supply struggles.
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all