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Weekly Economic and Stock Market Commentary: July 11, 2022


As for the stock market specifically:

The bulls ran in Spain, and they also made a run along Wall Street. I don’t know if anyone was gored in Pamplona, but only the bears were gored in New York City. We will be happy with the gains last week, but last week’s movement didn’t do much to change my overall assessment of where the market is from a risk perspective.

I didn’t get into it last week, but the combination of stock and bond market movement over the first half of the year resulted in the worst first half since the 1970s. I wasn’t an investor in the early 1970s, but that is what the tale of the tape tells us.

This week starts earnings season, so that will present its own set of complications for some companies. Stay tuned.

One interesting aspect of this year is that nearly every asset class has its turn to get beaten up. We also are now in the notoriously finicky third quarter, where we have many stories of things going awry.

The indicators moved higher and changed up last week. I have to say I am sorry for not updating them correctly last week. The numbers did improve since the holiday last week. WEALTH ACCUMULATION mode continues.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of July 8, 2022 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor announced the US economy gained another 376,000 jobs in June. This was well above the anticipated amount of about 240,000. The unemployment rate remained steady at 3.6%. Another surprise was that nearly as many people left the labor force as new jobs were created. In all, 353,000 left the workforce in June. Average hourly earnings rose 5.4% from June 2021, well below the inflation rate in the past year. We still are below the number of jobs in February 2020, but getting close to being back to that level.