Friends

Sorry I have been out of touch for a few days as I have been dealing with a family medical emergency. But I really wanted to check in after the inflation numbers we have gotten in the last two days. As you probably already know both the CPI and the PPI came in very hot with inflation spiking in many areas. Of course, higher energy prices are the biggest problem, but with inflation this hot, the likelihood of the Fed easing monetary policy is disappearing. Market participants are betting the next action we see from the Fed is more likely to be a hike in interest rates rather than a lowering of interest rates.

Stocks are still pretty much ignoring the data, but the ones carrying the water are becoming fewer as the advance becomes narrower and narrower. In the end we are going to need more than a handful of big names to keep stocks moving higher. As for today, by the close the Dow Jones Industrial Average was down 67 points to finish the day at 49,693. The S&P 500 was up 43 points to close at 7,444. The Nasdaq Composite Index was up 314 points to close at 26,402. Gold was up $9 to trade at $4,696 per ounce, while oil was down $.93 to trade at $101.25 per barrel WTI.

With inflation causing a headwind for stocks, corporate earnings are doing just the opposite. The growth in corporate earnings has been very impressive and better than many analysts had expected. So, I guess it’s headwind vs. tailwind for the moment. What a fascinating tug-of-war to watch play out.

Have a nice evening everyone.