gold colored fireworks

Market Snapshot 7.21.22- Jobless Claims Spiked

Good Thursday AM,

Bonds are happy this morning and relate to the terrible economic news released this morning. Jobless claims spiked to an eight month high  (no surprise there). The Philly Fed index was murdered at NEGATIVE 12%. The Leading Economic Indicator came in lower than we have seen for a long time. On top of this, The European Central Bank raised their rate by .50% (first hike in 11years). Mario Draghi resigned, energy costs have hit crisis levels in Europe. Russia turned back on a limited supply of natural gas to Europe through the Nordsteam pipeline, but only at a 40% flow rate. The other two pipelines serving Europe are shut off.

Inflation in Europe is higher than here in the US and European credit defaults (including Sovereign defaults) are rising. It is tough to see where companies that a do significant amount of business in Europe won’t be challenged (not sure I would be buying those stocks).

This all backs the Fed further into a corner. Next week we will hear from the Fed and learn what they will do with rates. Regardless of what next week’s move is (75bps, 100bps), I believe it will be walked back before the end of the year.

Please remain safe and stay healthy.