June 8, 2023
By Peter Bower
The stock market is experiencing an in-between stage, no big earnings reports are imminent, the Federal Reserve is probably on a pause, and economic data is sparse. So, this is a good time to look at the trading action. The Bull has cited money flow data many times in the past. Currently, it is still positive, but much less so. Trading has been narrow, but has recently broadened to more and more stocks, although not overwhelmingly so. Trading volumes are on the light side. Some or all of this may just reflect summer, typically a more subdued time.
Economically, data here, in Europe, and China show slowing activity. Europe may be in recession, but barely so. China’s reopening has not led to the increase in activity so many, including us, expected. Central bankers throughout the world seem to be getting what they wished for, constrained growth and hopefully, lower inflation.
Where markets go from here largely depends on corporate earnings. You may remember that last year many strategists and economists predicted an earnings recession this year. Clearly that has not yet happened. Early indications are that corporate earnings will again be strong for the second quarter. If prospects remain positive, then stocks should go higher. Sure, the market can get a little tired and face setbacks, but good earnings will soon drive it higher. That seems most likely; stay steady my friends.
The Lonely Bull
