Retail Weakness Yet Searching for a Bottom

The search for the bottom continues. The S&P 500 has now been down for seven straight weeks, and since the end of WWII, that’s been done only 4 other times. The S&P500 dropped below the “bear market “line intraday a few times but recovered the week to end above it.  Equity markets dropped with the net damage coming on Wednesday on the back of weak retail earnings guidance from Walmart and Target.  Too much inventory (late 4q21 cargo ship unloading’s after peak Christmas selling season), rising labor and transport costs, and slowing big ticket “goods” demand is a short-term perfect storm for retailers.  Great for a stingy consumer this summer if you held off the last 2 years and are looking for deals on a new computer, grill, or appliances.

The S&P 500 fell 3.0% on the week, while the Nasdaq gave back another 3.8%. Consumer stocks got clobbered last week on the afore mentioned Target and Walmart commentary.  Tighter monetary policy is biting housing activity and prices, with sales in the U.S. down meaningfully from their highs alongside higher mortgage rates.  The economic surprise index has now fallen back below the zero line in the US which is very normal for the second quarter time frame in our economy due to consumer led seasonality. Consumer discretionary stocks in the S&P 500 are down 32% on the year, the worst performing sector of the market on the back of difficult comps from easy money in the first half of 2021.

A combination of issues, including inflation risks, supply disruption, and the Russia-Ukraine war continue to cloud the horizon. The global central banking shift from quantitative easing (QE) to quantitative tightening (QT) has been tightening for 2022. The markets are struggling with the likelihood of a successful pass from liquidity to earnings to drive renewed equity market gains.  Recall, that the second and third quarters are normally slower to almost no sequential economic growth here in the US regardless of other global worries.

The hidden good news behind the scenes last week is that bond volatility, which led this downturn since late 4th quarter 2021, looks to be peaking. Recall that this “collateral” needs to stabilize before leverage players who borrowed to buy stocks on margin are no longer forced to sell at any price.  Moreover, real-time market inflation expectations continue to head lower.

Weekly Stock Podcast: Top Gun, investments, and Financial Planning

https://www.youtube.com/watch?v=onsX6Y3GA0U

News or Noise: Crypto Terra Luna Crash

https://www.youtube.com/watch?v=4LynWPHxbws&list=PLxj0FBH5Bt8vxmPI12L9xWcpoVMX7jqvZ&index=22

Oak Harvest YouTube Channel

https://www.youtube.com/channel/UCkLvOm9F5iC01-hHxRmUXpQ

Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):

https://oakharvestfg.com/stock-talk-podcast/

The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):

https://oakharvestfg.com/investor-mindset/

 This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.

Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy. Nothing in this content constitutes personalized investment advice. Any charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.

Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections have been accurate. No current or future forecasts and projections are guaranteed to be accurate.  And future forecasts may not be as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results will differ. Past performance is not indicative of future results. Investing involves the risk of loss.

Summary
Retail Weakness Yet Searching for a Bottom
Article Name
Retail Weakness Yet Searching for a Bottom
Description
The search for the bottom continues. The S&P 500 has now been down for seven straight weeks, and since the end of WWII, that’s been done only 4 other times. The S&P500 dropped below the “bear market “line intraday a few times but recovered the week to end above it. Equity markets dropped with the net damage coming on Wednesday on the back of weak retail earnings guidance from Walmart and Target. Too much inventory (late 4q21 cargo ship unloading’s after peak Christmas selling season), rising labor and transport costs, and slowing big ticket “goods” demand is a short-term perfect storm for retailers. Great for a stingy consumer this summer if you held off the last 2 years and are looking for deals on a new computer, grill, or appliances.
Publisher Name
Oak Harvest Financial Group
Publisher Logo