"There is much to evaluate and hard choices to be made" by: John Sample

   That was a week with a lot to digest.
  The inflation measures came in a bit higher than projected.
  The initial earnings reports from the financials were about what was expected.  Then, of course, over the weekend, Iran directly attacked Israel with drones and missiles.
  The problems in the Middle East could actually become a Black Swan for this market.
  It has already raised the level of oil prices and has impacted shipping.
  That is just the economic side of the equation and doesn’t even factor in the consequences of an expansion of conflict.
The inflation numbers last week cast a shadow on any rate cuts coming soon from the Federal Reserve and many attributed the losses to the averages and indexes to that reality.
  I for one don’t see the current level of rates as punitive and I believe the earnings reports coming out over the next several weeks will validate that point.
  In the financial markets however, it is not what you have done for me but what will you do for me.
  It just doesn’t seem apparent that the economy is slowing.
  Many look for GDP to slow in the last two quarters of the year.
  I am not sure what that forecast is based on, but it appears that many feel that will be the consequence of not lowering interest rates.
  Do not forget that Fed Chief Powell has stipulated that rates will come down when the data warrants and he believe that will happen later this year.
  The problem for many is that we are not going back to zero-interest rates.
The problem hiding in the weeds is two-fold.
  We have far too much of this market’s gain lodged in seven stocks.
  The rest of the S&P 500 has not grown anywhere near as much.
  It would not take much to send this market south quickly.
  I would view that as a correction and not a bear market however.
  A better balance of wealth in the S&P would make me feel a lot better.
  The other factor is the growing debt situation.
  It is almost beyond Congress’s ability to deal with anything other than spending money.
  I know that there is a good to great cause under every rock.
  That is not a reason to spend what you can’t afford.  Sooner than later, we will be held back by our previous spending spree.
  We literally have kicked the can so long down the road that it won’t even roll anymore.
It does appear though that the current earnings reports will be positive and markets are driven by earnings.
  Markets get distracted by all the other factors.  I am not saying that nothing can go wrong, but continued positive earnings is a great safety net.