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Marc Cuniberti: Market update

Marc Cuniberti
Marc Cuniberti

Last week saw glimmers of “green” hope as some stocks continued higher into the month.

Mid-week however gave in to some more selling as companies everywhere were revising estimates and reporting less than expected earnings for a variety of reasons.

Target reported close to half a billion was lost due to what it called “retail organized crime”.

No doubt new and puzzling legislation in a variety of states taking a softer stance on theft may be to blame. Watching people running out of stores with armfuls of free stuff during protests in the last few years probably didn’t help, both in earnings nor by discouraging others not to try it.

So goes our world right now.

May you live in interesting times?

Unfortunately, I wouldn’t deem all things that are happening with the word interesting, but rather perhaps the word unfortunate would be more appropriate.

Another unfortunate event is the ongoing inflation we are all suffering through. A handful of statistics last week signaled a decrease in the velocity of inflation and in the nominal rate which goosed investors to buy some stocks.

I am of the opinion we are far from out of the woods however.

In fact, with the ongoing parade of company earnings reports stating rising costs as a major concern, inflation continues to devour balance sheets.

The talking heads on the popular news wires are putting on their happy faces, trying to squeeze out any little bit of good news from the otherwise dismal inflation data which continues to hammer stocks.

It’s quite stunning how far some stocks have fallen, including some of the most prevalent previous market darlings, some of which are the most well-known names in the markets.

Meanwhile the Dow Jones Industrial Average (DJIA) slowly creeps off its year lows. Amazingly, at the time of this writing, The DOW is only down 9% from its all-time high.

Makes you wonder right?

Damn, should have just bought the DOW!

Reverberations from the bankruptcy of crypto exchange FTX seem a bit muted to this analyst. It’s my guess a bunch of folks are hiding a bunch of bad stuff from the FTX implosion which will surface eventually.

I would bet there will be some surprising landmines (aka other companies) that will explode in the weeks to come due to the domino effect of the FTX blowup. A firm as large and as essential to crypto as FTX was doesn’t implode and not put at risk many more entities that had dealings with them.

The FEDS may already be involved in clandestine bailout talks. Only time will tell.

No doubt a parade of sad stories from people who lost it all will float across the newswires as we progress along.

One wonders if everyone knows what “caveat emptor” means. For those of you who don’t, it means buyer beware, and you would have read that phrase many times here on Money Matters in the past year or so when it comes to crypto.

An interesting side note is although the markets have seen the worst year in decades as to the length and breadth of the decline, certain sectors have fared better than others.

Energy, healthcare and pharmaceuticals may show some yearly green, as well as a few stocks in the (surprisingly) retail sector. Energy and related industries far exceeded everything else however.

The Federal Reserve has raised interest rates four times in 2022 and they are expected to do it again at their next meeting in December. After that it’s a crapshoot as to what to expect. As always their decisions will be data dependent.

For now the financial world looks to the holiday season as an indication as to how the consumer is doing. With inflation boosting prices on just about everything, now doubt the purchasing figures will be up year over year again and the talking heads will look to spin that up to “the consumer is doing fine”.

I don’t know, are you doing fine?

The most accurate figure on holiday spending however would be the number of units sold instead of how much in total dollars was spent.

Higher inflation no doubt makes total spending higher and the high inflation we have been seeing will likely boost the overall total by a lot.

In actuality however, the truth will likely be a lot FEWER gifts were bought due to the higher price of each gift.

That makes a little more sense doesn’t it? But don’t look for that number on the news wires. You won’t see it.

“Watching the markets so you don’t have to”

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.


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