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Review and preview of current stock market events

Last week marked the Dow's first eight-week losing streak since 1923, while the S&P 500 ended a seven-week losing streak, its worst since 2001.

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  • Review and preview

  • Short-term geocosmics and longer-term considerations

Review and preview

A Fed report shows inflation is slowing somewhat, that boosted stocks Friday. The core personal consumption expenditures index rose 4.9% in April, down from 5.2% the previous month.

Technical indicators and chart patterns were down, as was investor sentiment on fundamentals. Finally, interest rates are rising and are expected to continue to rise in the coming months. Inflation is at its highest level in 40 years. Home sales are stalling due to the rise in mortgage rates. People are postponing or canceling summer vacation plans due to the high cost of gasoline and air travel. The number of people who believe the economy is moving in the right direction has dropped to just 20%. People's sentiment is not good. 

 

Most global markets followed a similar pattern to the DJIA. That is, they recovered significantly by the end of last week from their multi-month and even annual lows of the previous week of May 20. For most, the recoveries meant the highest levels in the last 3 to 5 weeks. 

 

In other markets, gold and silver posted nice rises all week. Gold tested 1870 early last week, rising sharply from its recent multi-month low of 1785 on May 16. Silver rose to 22.47 on Friday, its highest level in three weeks. Crude oil rose to 115.30 on Friday, May 27, testing its 8-week high of 115.56 set on May 17. Bitcoin, on the other hand, was quiet, trading between a high of 30.693 last Monday and a low of 27.959 on Thursday, while Ethereum fell to 1710 on Friday, retesting its multi-month low of 1702 from May 12. It seems that the link between the stock market and Bitcoin/Ethereum is broken. Stocks rose and cryptos slept.

Short-term geocosmics and longer-term considerations

A recent Associated Press- Research poll found that only 21% of adults believe the U.S. is moving in the right direction, down from 29% in April. Even Democrats are losing hope - only 33% think the U.S. is moving in the right direction, down from 49% a month ago and 55% in March. 

The U.S. is in an economic situation it hasn't experienced in 40 years. Successfully navigating it will require a degree of political skill that has been notably lacking in both the monetary and fiscal arenas in recent years. 

 

The COVID-19 pandemic restrictions may finally be lifted and people can once again travel freely. However, this may also be a time of carelessness. 

 

Investors are likely to be reminded that the Fed is still going to raise interest rates, that Russian efforts to gain control of Ukraine are still underway, and that COVID-19 is still a health concern because the restrictions have been lifted and the contagion is still not over. We enjoy being free again and letting our guard down, but the reality still requires awareness that the virus is not taking care of itself and hospitalization cases are on the rise again, especially among those who are not vaccinated. According to the May 20 CDC report, "...unvaccinated adults 18 and older were about five times more likely to be hospitalized with COVID-19." 

 

President Joe Biden is probably right about one thing when he says the economy is in a transition. It is probably transitioning from an economy that still relies on fossil fuels today to one that will soon move to using alternative energy sources to power the world going forward. But for this transition to be successful, it must be gradual. For it to be ACCEPTED, policies in this decade must be moderate and the pace of change must be steady. Not too much, not too fast. Not too little and not too slow. Otherwise, societies will rebel, and rather than an intellectual and creative revolution, we will see social dislocation and upheaval.

inside-alternavest.article.information

Review and preview of current stock market events

Last week marked the Dow's first eight-week losing streak since 1923, while the S&P 500 ended a seven-week losing streak, its worst since 2001.

inside-alternavest.article.writtenBy Massimo Di Santo.
Alternavest Partners GmbH Otto-Heilmann-Str. 17 82031 Gr├╝nwald

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