Marc Cuniberti commentary: Is the market running on fumes?

Seems the market might be running out of gas. As mentioned in recent Money Matters news, seven of the best-known and loved stocks may have had a big part in driving the recent multi-month rally in equities. As covered in my recent articles, the data the central bank of the US Federal Reserve (FED) bases its monetary decisions on are mostly backward looking. It is the nature of statistics. Employment and jobs data look at what has already happened, as does consumer prices, consumer savings and spending habits, and just about all the other statistics that flow out of the Bureau of Labor Statistics (BLS). The FED looks at this data then applies the gas or brakes to the economy through the use of its tools to try and cool inflation and maintain a healthy jobs market. Of course, it would be impossible to tell what will happen, as no one has a crystal ball. But the FED bases its decisions on where we are going from where we have been. A difficult task for sure. No one, including the FED and its army of economists, can tell what something will last. So, although the FED tries its best to succeed, it has no way of knowing how successful it will be in steering the economy. As I suggested a few articles back, last quarter's earnings reports may have illustrated a consumer that was still ringing up the registers. Hence, the FED indicated at that time it may continue on its crusade of raising interest rates. The revisions from many analysts after last quarter's earnings reports also appeared to have been toned down. Some were suggesting a recession may not be as severe as first expected or even occur at all. Fast forward to this most recent earnings season, which just ended, and we have heard reports of slowing demand. Other recent media outlets have noted the consumer may be cutting back on spending and increasing credit card debt. https://www.lendingtree.com/credit-cards/credit-card-debt-statistics/0 Although it took a while, it may now become apparent the FED's tools to squash the economy are indeed working. Couple that with our stubborn inflation and we may finally be seeing the slowdown I mentioned might occur and a recession may still be in the cards. The prognostications run the gamut. We will see if the FED or your Money Matters columnist is correct on or about early 2024, which is when I suspect something unmentionable may hit the fan. 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 BA in Economics with honors, 1979, and California Insurance License #0L34249. His insurance agency is BAP INC. that can be contacted at 530-559-1214. Email: news@moneymanagementradio.com.