Wow, everyone hates everything. Everyone knows that we are in an untenable situation where, because of a strong GDP, the Fed has to raise four times and the president can rail at the Fed some more.
It's business as usual: real bad for the stock market.
How do we get out of boxes like this?
- We go down appreciably more to where the machines turn off and companies can buy back stock and make a stand.
- We get an employment number that shows that the GDP number is history and that the companies' forecasts are more in play, and they are downbeat.
- Someone blinks. Unfortunately the strong GDP takes that off the table EVEN THOUGH THE GDP SHOULD HAVE BEEN STRONG. Remember, it is because something happened in the last six or seven weeks that really triggered the slower data.
Now it is possible that all of the companies that have warned or have had shortfalls are run by rank incompetents and we are seeing main street doing incredibly well but the publicly-traded companies not doing as well.
It is also possible that stocks just got too high versus the companies' prospects.
But I think the wall of worry is very high because the Fed has made it been high and Trump has made it so the Fed can't make it less high.
The Fed is more in control than I have seen since 2006-2007. The tightness is moving the dollar higher. The tightness is causing a slowdown that has just taken hold and it is hard to undo.
I know, also, the president doesn't think the tariffs really are hurting anything in America and he can bolster that view with the GDP number we just got.
Here's what you need to remember. Go back to 2006 and the first part of 2007. Those of us with boots on the ground knew that things were rolling over pretty precipitously.
I think it is doing that this time, too.
Which brings me back to how you bottom. You bottom when we go down appreciably and I do believe many stocks have done that.
We are putting to work some of our precious cash raised when times were better.
No choice. Bargains are being created and I think that the health cares and the consumer packaged goods stocks will bottom first.
But China/Fed/Trump control and they are not on the side of the bulls. Take one look at the bonds if you disagree. Shouldn't rates be up gigantically on that GDP number?
That says it all.