When you think it is going down, when you predict it is going to fall and when you even nail specific dates that you expect weakness, you can't be shocked and you can't be horrified.
Yet that's how I think people are feeling after the one-two punch of Fed chair Jay Powell acknowledging that we may have to pull forward hikes in 2023 and then St Louis Fed president Jim Bullard saying on CNBC that we may have to raise rates as early as late in 2022.
Obviously anything that even signals that there are going to be rate hikes is viewed as a negative by the stock market. It's scared of its own shadow. That's just how the market always reacts, which is why we melded the technicals, which show that we have been down in this period 22 out of 22 years, and Fed fear to suggest that you wait until next week to do some buying.
When the stock market is down there is always a propensity to want to do something, anything, to react to the decline.
But we reiterate that you have to wait, both because of the calendar and what has happened this year, and because there will be more people reacting to the Bullard interview, including strategists, on Monday.
When that happens I think you want to buy tech because tech historically is what works when people are worried about slowing growth.
Slowing growth, you ask,? Isn't the economy red hot?
To which I say it was but the fact is the imbalances that have hurt us so much are beginning to take care of themselves. The entire commodity complex has had a swoon that reminds us that no matter what you year, there are markets busy responding, the first being the commodities. That's great news for the consumer as the commodities market is a big reason why the price of food just keeps going up and up.
The surge in chemical pricing because of superstorm Uri had been a major thorn in the side of the consumer. But that's changing, too. A bunch of new plants are coming on line and I think that's going to bring down pricing. That's the case historically even in boom times. Lumber, soy, corn, copper, you name it, it's going down. The job's being done strictly through jaw boning and the process by which we get used to a rate hike before we have one. That way when we get one nothing happens, no surprise, no giant sell-off. The sell-off is now.
Let's say you don't believe me. Let's say you think that all of the 22 out of 22 times this market's been down is all hocus pocus.
Then I offer you Amazon (AMZN) . I think this company's Prime Days, June 21st and 22nd, will show you how strong the franchise is post-pandemic. That would be a stock I could see buying. We got a piece of research today from JP Morgan saying that not only is retail going well, and Amazon Web Service amazing, but advertising could produce $28 billion in revenue this year, at an immense profit.
There: you have a catalyst and an incredible data point in a group that's what you are supposed to buy when the economy is slowing down. I give you my blessing to buy it on Monday but only if it is down. Otherwise just take a pass.