In his Daily Market Notes report to investors, while talking about inflation relief, Louis Navellier composed:
We are most likely going to get a huge down revision in the fourth-quarter GDP estimate. The Fed is going to synthetically keep rates low due to the fact that we cant pay for the interest on our $30 trillion deficit. Guess whats going to take place when we get the January customer and producer rate indices? Theres a lot of chatter that tech stocks are going down because of interest rates. The bottom line is right now, companies are going to reveal very excellent incomes.
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Now, the primary factor that the stock market got up on the wrong side of bed this morning is that we had a devastating retail sales report from the commerce department. Specifically, the commerce department revealed that in December retail sales fell 1.9%. Financial experts were just expecting a 0.1% decrease.
When we exclude automobile and fuel sales, retail sales dropped a more dramatic 2.5% in December. We are most likely going to get a huge down revision in the fourth-quarter GDP estimate. Later today, theyre going to revise that lower.
In the big photo, the consumer beings in a strong position with savings and bottled-up need, the worldwide reopening seems very most likely at some point this year given pandemic signs, and revenues projections stay strong. We may not see the very same quick dips people have actually gotten used to however expect solid growth in 2022 and make the most of weakness in names with solid earnings and strong development potential customers as the marketplace adapts to the elimination of the financial and fiscal pandemic assistance and go back to a concentrate on principles and incomes development.
No Inflation Relief
Now, the Fed is withdrawing some of their quantitative easing. Theyre still doing some, last I saw, about $90 billion a month. So, theyre still in there supporting the treasury bond yields, however although they tilted higher this year, it appears like theyre going to find equilibrium. And market rates are much, far more important than Fed rates. The Fed follows market rates. Its as easy as that. However the Fed is going to synthetically keep rates low since we cant afford the interest on our $30 trillion deficit. Its as simple as that.
So, we have some Fed folks stating theres going to depend on 4 short-term rate boosts this year. That is not going to hinder the stock market because today, inflations running a lot hotter than rates of interest.
And simply so you understand how bad it is, the CPI, of course, is running at an annual speed of 7%. The PPI, the producer rate index, is running at a 9.7% increase. Think whats going to take place when we get the January customer and manufacturer cost indices?
When we break down inflation, it wasnt energy in December, however it will be in January. What was high in December, and the most stunning thing was a 1.7% boost in transport warehousing. Inflations becoming more structural with all these port bottlenecks that we have.
Theres a lot of chatter that tech stocks are going down due to the fact that of interest rates. Tech stocks have absolutely nothing to do with interest rates. The bottom line is right now, companies are going to announce very excellent revenues.
Concerning stocks, we are going into a funnel and therell be less leaders leading at the end of the fourth quarter statement season. Around mid-February, theres going to be less leaders and its going to get more selective.
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