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This week’s Friday Update includes a summary of the recent Cabot Turnaround Letter, and comments on earnings at Macy’s (M). We also summarize the podcast and include The Catalyst Report.

The major indexes have been up and down this week, but net-net, there’s not too much change—as of this morning, just about every index and growth fund we watch is down a touch to up less than 1%.

The market’s downtrend has generally continued this week—even including the pre-market rally in the futures, the S&P 500 and Nasdaq are off in the 2%-plus range, though things like small and mid-caps, as well as growth-oriented funds, are close to unchanged.

This week’s Friday Update includes comments on earnings from Duluth Holdings (DLTH). Two stocks are at or near our price targets and we summarize the podcast.

The market is having one of its better days in a few weeks—as of 2 pm ET, the Dow is up 578 points and the Nasdaq is up 329 points

The indexes had a good day, with growth stocks and the broad market doing even better. When the closing bell rang, the Dow was up 347 points while the Nasdaq was up 259 points.

The market has deteriorated over the past couple weeks. The S&P 500 fell into a bear market on June 13th. The combination of continuing high inflation and a more aggressive than previously expected Fed has led to widespread expectations of recession over the next year.

Recessions are bad for stocks for obvious reasons. But there is something worse than recession, looming recession. Stocks generally recover during a recession. Because the market anticipates, it tends to rebound before the economy. The worst environment for stocks tends to be prior to recession, upon expectation, to part of the way through it.

This market has recovered nicely after plunging into bear market territory and beyond the week before last. Unfortunately, the good times probably won’t last.
All year long the market has bounced to some sort of recovery after plunging to new lows. But stocks can’t seem to muster any lasting traction with rising interest rates, high inflation, and a souring economy. Those things are simply too much of a bummer to whistle past.

The market has moved off the lows of last month. But stocks really aren’t going anywhere.
The problem is recession. An increasing number of economists are calling for a recession in the next year as the Fed aggressively raises rates and pulls back stimulus in an effort to tame this high and persistent inflation. Stocks are already at least partially pricing in a recession that may not even happen.

It’s been a down week thus far for the market with most major indexes down in the 2% to 4% range coming into Friday. Really, nothing has changed from what we wrote last week—the intermediate-term trends are still down for the indexes, for growth funds and for the vast majority of stocks and sectors.

Explorer stocks held their ground this week as we move two positions to a hold. Don’t be too discouraged. S&P 500 stocks struggled in the first half of this year, roughly equal to that of 1970. That year the S&P 500 fell 21% in the first half and then gained 27% in the second half. Let’s hope 2022 follows a similar pattern.

Today’s inflation data (CPI) wasn’t expected to be great but was even a little worse than anticipated as consumer prices rose 8.6%. That’s up from 8.5% in March and 8.3% in April. One can slice and dice the data a lot of ways but if you want to flag the main issues, they are probably energy and food prices.