Not Bad, All Things Considered (Technically Speaking For 3/3)

Stock Market

Bull and Bear Symbol with Stock Market Concept.

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The Fed released the latest Beige Book yesterday:

Economic activity has expanded at a modest to moderate pace since mid-January. Many Districts reported that the surge in COVID-19 cases temporarily disrupted business activity as firms faced heightened absenteeism. Some Districts attributed a temporary weakening in demand in the hospitality sector to the rise in cases. Severe winter weather was also cited as disrupting activity. As a result, consumer spending was generally weaker than in the prior report. Reports on auto sales were mixed. Manufacturing activity continued to grow at a modest pace. All Districts noted that supply chain issues and low inventories continued to restrain growth, particularly in the construction sector. Reports from banking contacts indicated some weakening of financial conditions, although loan demand was generally unchanged. Demand for residential real estate was generally strong, although many Districts reported no change in home sales due to seasonal trends and low inventories. Agriculture reports were somewhat mixed, as some Districts experienced difficult growing conditions while others benefited from higher crop prices. Reports on the energy sector indicated modest growth. Among reporting Districts, the overall economic outlook over the next six months remained stable and generally optimistic, although reports highlighted an elevated degree of uncertainty.

To reiterate: temporary factors caused slower growth. Supply chain issues remain. Respondents were optimistic. However, this was before the war in Ukraine.

This is from one of the Twitter lists I subscribe to:

Commodity gains in the last year

Commodity gains in the last year (Twitter / Charlie Bilello)

Those are some eye-popping gains that explain a decent amount of the price increases we’re seeing.

The latest ISM® PMI Service® was strong. The PMI rose 1% to 58.6; new orders gained 3.8% to 61.7%; production advanced .7% to 58.5%. Here are some anecdotal comments of note:

  • “Electronic supply chain is still a mess.” [Computer & Electronic Products]
  • “Strong sales growth as retail continues to return.” [Chemical Products]
  • “We are expecting a year of strong demand, higher prices and continued supply chain challenges.” [Textile Mills]
  • “Business is still strong. Facing logistics and raw material supply chain issues with some products. ” [Plastics & Rubber Products]

Finally, employment is still challenging:

An overwhelming majority of panelists again indicate their companies are increasing head counts or attempting to, as 90 percent of Employment Index comments were hiring focused. Among those respondents, 34 percent expressed difficulty in filling positions, up from 31 percent in January. Turnover rates remained elevated (38 percent cited backfills and retirements, a decrease from 44 percent in January), continuing a trend that began in August, ”says Fiore.

The author has written permission to use the current month’s report.

Here are today’s charts:

1-day SPY, QQQ, DIA, and IWM

1-day SPY, QQQ, DIA, and IWM (Stock charts)

The markets sold off in the afternoon. But there was a counter-bid in the last hour of the drop. Note the decent bump in the IWM into the close.

5-day SPY, QQQ, DIA, and IWM

5-day SPY, QQQ, DIA, and IWM (Stock charts)

The 5-day charts could be a lot worse, all things considered. The QQQ has the worst chart and it’s only been down modestly since last Friday. The SPY, DIA, and IWM are holding up well.

As I mentioned in the title, this could be a lot worse.

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