This Is a Healthy Uncertainty
The struggle is real, and it’s generally good.
The major equity indexes opened in the green this morning then fell sharply, no doubt reacting to hotter-than-expected Producer Price Index data and softer-than-expected retail sales data for February.We got the action generally correct in our preview yesterday morning: a big move one direction right on the news, an even bigger move the other direction upon a little further reflection.
The indexes trended down through the day but did bounce off the day’s lows into the close.
That mix of data – including fewer people applying for first-time unemployment insurance – has investors, traders, and speculators thinking the Federal Reserve can be as patient as it wants to be before it makes a move on the federal funds target range.
It’s a healthy sort of uncertainty, a dynamic economy still in flux following a global-historical disruption amid major wars on two continents and a grinding election season.
That end-of-day spike is not a bad end, even if the S&P 500 closed in the red.
Dan further noted that “the US economy has foundational strengths that will carry it forward from strength to strength over the long term.”
Those “foundational strengths” go well beyond the so-called Magnificent Seven, and money is moving into areas that have been overlooked while those stocks have been carrying the market.
The Magnificent Seven have done well for good reason: They have the best margins, the best growth, the best balance sheets, and reasonable valuations as a whole.
But Dan sees scope for broadening out of the economic momentum that we've seen, and he sees other sectors participating.
As ever, there are “pockets of opportunity and pockets of risk.”
Be sure to check out the complete Pro Tips interview with Dan Rohinton.