0

It's All About Earnings and The FED

PUBLISHED Apr 9, 2022, 3:14:05 PM        SHARE

img
imgTom Hamilton

April 8, 2022 – I get asked “Why isn’t the stock market recovering (fast)? Must be (fill in the blank, usually political)!” Actually it’s all about earnings (a.k.a. profit), now and in the future.

The market likes constant / stability. Stable good or bad is OK as long as “they” (investors) can evaluate what it is and what it affects in the market. Thus money rotates were it will do best in the future; or at least everyone’s best guess of the future. With unemployment low and the economy on fire why aren’t we roaring to all-time highs? The unknown is the answer, and that’s what makes Wall Street very uncomfortable. So much so that the big guys / gals buy Put options and Futures to hedge (protect) their portfolios. These instruments have expiration dates and must be “unwound” before those dates. That means volatility during the settling process. Then the question is will that protection be renewed / rollover again. Make no mistake about it, options and futures activity does affect the stock market. And big pension portfolios & mutual funds need a lot of these to offset their holdings; billions in short order.

Now getting back to market concerns and future corporate earnings. Companies big and small are faced with a rapid increases in demand and a limited supply. “Happy days are here again” style demand came very quickly via Covid case drop offs, that with many having added savings in the bank created demand, a.k.a. “Back to Normal”. But companies have limited supplies. They are faced with limited labor, higher wage demands, supply chain issues and higher costs. With inflation concerns by the consumer being an issue, can they raise prices or absorb these problems without affecting profits?

I’m thinking that the FEDs policy on May 4 could be a significant event. The markets have priced in interest rates rising, but how much and how fast? The bigger issue is under the surface, and that is liquidly. The FED has purchase soooo much public and private debt that it intends to sell (or retire) back into the markets. How fast that happens will definitely affect liquidity in the capital markets. Note the sudden spikes in the FED balance sheet chart below.

There is a lot of money / capital up in that chart that the FED intends to deal with to fight inflation. Just how they go about doing it is a key factor for the future. I don’t know and the markets don’t know either; “unknown”. Liquidity, the availability of capital, is the life blood of a capitalistic economy and that’s why this matters. That’s the reason why the next FED meeting and the current corporate earnings projections will be important. Current earnings should be “OK” but the forecast of earnings will be something that everyone on Wall Street will be closely watching. Have a good week. ......... Tom ...........

*more discussion and sector table at: www.special-risk.net *



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
5 Tips for Great Social Media Content
Image

Learn how to use social media to promote your small business

Sentiment Versus Reality
Image

Yahtzee.....LOL COAL MINING COMPANY

How to Find Quality Stocks to Buy
Image

You can find quality stocks using this easy step-by-step guide. Stock investing was once complex, but with a little bit of engagement and some patience, beginners can find investment opportunities. The key is knowing what investments are right for you.

How to Setup an Assets Spreadsheet
Image

You can setup an assets spreadsheet using google docs or Microsoft excel. In this guide, we'll walk step-by-step on how to setup a successful assets spreadsheet that will work to growth your wealth

Personal Finance for Beginners
Image

You can manage your personal finance today in 6 easy steps

What does it Mean to Own a Stock?
Image

When you own stock in a company you are an owner of a corporation. You've delegated management to an executive team led by a Chief Executive Officer. Their goal is to make money for the investors, which you are one of. The investors elect a board of directors to govern the company.

A Beginners Guide to Stock Investing in 5 easy steps
Image

Thanks to technology, investing in the stock market is easier than ever. In this guide we'll walk through 5 easy steps you can do today to start investing.

How to Protect Your Facebook Account from Hackers
Image

Have you ever received a friend request from somebody you were already connected with, only to see that person post an update that says, ‘don’t accept any friend requests from me, I’ve been hacked’?

How to Increase Traffic to Your StockBossUp Content
Image

StockBossUp is financial media 3.0. Our mission is to build user wealth using knowledge and technology. Content creators are the key to building this knowledge. In this article we'll share how content trends so that you can earn a share of our growing audience.

Strong But A Little Tired
Image

Market Commentary

Common Mistakes Made by New investors
Image

The biggest mistake new investors make is not managing the risk of their investments. The stock market is a money machine and not a slot machine. Watching for these common mistakes can improve your risk management and build wealth.

What are Safe Investments?
Image

Safe investments have a low possibility of loss. This safety comes with a tradeoff as the return on safe investments will be lower.

What are Risky Investments?
Image

Risky Investments have a high probability of loss. Risky investments may have a high upside, but not all risky investments are bad investments.

How do you Avoid Buying High?
Image

Avoid buying stocks at their high by monitoring the current market value and measuring the intrinsic value of a stock versus its current price.

Crypto’s Role in the Russian-Ukraine War: Everything you need to know
Image

It is not news that Russia and Ukraine are not on good terms, and the former head of the Soviet Union has gone to war with Ukraine over claims of allegiance with NATO. Russia has received a lot of backlash from the international community over this. In this article, we will be looking at how Crypto has played a pivotal role in the Russia-Ukraine war.

5 Ways to Promote Your Side Hustle Now
Image

A side hustle is a business opportunity that’s usually alongside of full-time employment. The great thing about a side hustle is that it can develop into an opportunity that allows you to quit your regular job and pursue that business entirely.

Yuga Labs Launches ApeCoin and DAO: Here is what to expect.
Image

If you have been in the crypto space as long as we have, we are sure you wouldn’t be alien to the Bored Ape Yacht Club and Yuga Labs. In this article, we will explore the ApeCoin, a token that was recently launched by Yuga Labs and what the future holds for the Bored Ape Yacht community.

New Investor Tips
Image

These new investor tips help to answer questions most new investors ask when they first start investing.