Yesterday, we had the State of the Union. Biden laid out his successes and agenda for the next year. You can get a recap here or any news channel. The thing that struck us the most was how divided we still are as a country. It should be an interesting next few days. The market hates uncertainty. The Democrats are discussing the jobs created and their accomplishments for the past year. Republicans have dug their heels on their agenda and trying to make a change. I am not as concerned about the different sides, but how the market perceives the future. It looks like gridlock is here to stay. They will need to work together. This might be difficult in the short period as no side will want to concede. There looks to be some hope on collaboration. We will see going into the 2024 election. Republicans don’t have a leader yet and Democrats aren’t certain Biden is physically fit to be President. We will certainly see how the next two years play out.
For the next month, I foresee more of a flat market as we continue to look at the data. The markets are saying the worst of inflation is behind us. The FED is not conceding so fast. Powell did say Inflation is starting to ease but interest rates are still going up. To understand what this means to the average consumer and the economy read this short article. I would expect more of a flat to down market in the near term. The market likes certainty. Bottom line, it will be data dependent. Jobs are still strong, but if you have a job keep it! Layoffs are the news everywhere but the labor numbers are astoundingly good. Until we see more certainty, it will be choppy with more bias to the downside. Regardless, there are green shoots everywhere. The data is showing positive signs. Earnings revisions going up will be the major factor in the future. Our suggestion is to continue to save and buy only quality. This is not the time to buy speculation.
More tomorrow….
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