Richard Cripps
Richard Cripps
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It's the analogy of the straw and the camel's back. We keep loading the camel's back with straw and higher energy prices and interest rates. It's probably going to be what's good for oil is going to be bad for the rest of the market.
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We're facing the realization that rising (interest) rates and rising stock prices are incompatible. The higher rates are really starting to make themselves felt.
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Wal-Mart highlights an economic transition from relying on consumers to relying on the private sector and capital spending. So, we're looking more at companies like Caterpillar rather than Wal-Mart.
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You've lost your earnings catalyst so we're moving away from the second quarter. With the economy moderating you're looking at earnings estimates that are too high and have to come down.
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This was a good, constructive quarter. The market overcame two problem areas: the Fed raising interest rates and high oil prices.
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The key area to watch is what financial stocks will do. They've been performing well and it's clearly a pattern of higher highs. If they take this (interest rate hike) well, my confidence that we're getting to the end of these Fed hikes will increase.
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And while you are waiting, you get a 3 percent yield and one of the strongest balance sheets in corporate America.
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Putting it in context, it wasn't a great display of bullishness one would assume.
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Probably in the short term we're a little ahead of ourselves. We don't have any earnings visibility and we won't until the fourth quarter.
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Either the fundamentals have to grow much faster or the stock has got to come down.
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Between October and March, the Nasdaq has almost doubled in price. Even these companies that have been cut in half are still three or four times more than they were a year ago.
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You get a kick in the market that draws in the buyers. I think we're in a trading range and are getting into the bottom half of that trading range.
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I would let this play out as opposed to trying to be brave and buying here.
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I think if you are bullish here, you go back and look to the last time the Fed eased up on interest rates which was 1995, which, of course, was a good year for investors. The S&P shot up almost 35 percent. So using that as a guide, some investor think that is what we're going to see.