Things Are Less Than Robust
And markets are getting messier.
This is what Peter Boockvar is talking about in his June 19 StockPick Interview.The major equity indexes were mixed to negative on Thursday, reflecting an ambiguous economic picture.
Decreasing activity has implications for inflation – good ones – and earnings – not good ones.
“So, the US economy, from all the things that I analyze, is remarkably mixed and uneven,” Boockvar says. “For every pro, there's a con. For every bright spot, there's a dark spot.
“And I think in the aggregate, it feels like a one, one-and-a-half percent-type economy. It's not a recession, but it's not growing robustly.”
Twenty-five of the 30 names in the Dow Jones Industrial Average were in the green, Salesforce $CRM leading the price-weighted index higher by 0.77 percent for the day.
And the S&P/TSX Composite Index posted a modest gain, probably on the mini-surge for crude oil prices.
But the S&P 500 and the Nasdaq Composite were both lower, as was the Russell 2000.
But the 238,000 print exceeded the consensus forecast and is the second-highest since last August. And the previous week’s count was revised upward from 242,000 to 243,000.
Continuing claims for unemployment insurance also beat expectations, 1.828 million versus 1.81 million, and were up from 1.813 million the previous week.
That’s not necessarily a good “beat” or an encouraging increase, unless you’re only in it for the rate cuts.
The S&P 500 is a market-cap-weighted index, so Nvidia’s $NVDA ever-increasing escape velocity can carry the whole thing higher.
“The better those stocks do, the more helpful it is to that index,” the chief investment officer at Bleakley Financial Group observes.
Through Wednesday the S&P 500 had posted a gain of about 14 percent so far in 2024. But, as Boockvar points out, an equal-weighted version of the index would show a gain of about 3.5 percent for the same period.
“The rest of the market is much more mixed.” The major dispersion and divergence in performance among individual stocks reflects the lack of visibility on economic growth.
Investors are piling into the stock(s) they think will generate the most growth. They’re also seeking out companies with balance sheets strong enough to absorb elevated interest rates.
Boockvar identifies the commodities sector, including The Mosaic Company $MOS for its potash and fertilizer assets, as an area of opportunity in this market.
He also says Under Armour $UAA is undervalued right now but is poised for a comeback with the return of founder Kevin Plank as CEO.
Boockvar’s last idea is precious metals, including gold and silver. “We remain very positive on those too.”