From the desk of Vance Howard:
The inflation number yesterday was very hot up to 9.1, which is disturbing to say the least. Is inflation priced into the price of stocks and bonds? My answer is probably yes. BUT, what is not factored in yet is a recession. If we roll over into recession, bear markets sell off deeper and last longer, and I do not think that is priced in yet. Every day that goes by, the data is pointing to a recession. We have heard the word soft landing a lot, but if we roll over into a recession, I don’t see any way that we have a soft landing. I think we all might need a chiropractor to straighten us back out.
What investors need to watch is not all the data, not an economist (who are just about always wrong), but the trend of the market. It will tell you everything you need to know about how to trade/invest in any environment. The HCM-BuyLine® is negative, meaning the trend is clearly down. Don’t fight the trend as it’s a great way to go broke. We are sitting on a mountain of cash, possibly more than just about any firm on Wall Street, and when the trend turns back up, we will start buying deals at a fast pace. Until then, controlling emotions and being patient is the key to success.
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Vance Howard
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