Stocks Down Yesterday, But Up For The Week Ahead Of Friday's Inflation Report  Image: Bigstock Stocks closed lower yesterday, giving back Tuesday's gains, but still up for the week. The current 'debate' in the market right now is, will there be a recession or won't there be? I'm in the, 'no recession' camp for an overwhelming number of reasons. But the back and forth we've been seeing is essentially the market trying to answer this question. If a recession is in the offing, then the lows that we saw three weeks ago were justified. And maybe then some. But if not, and it's another year of growth, then stocks are grossly oversold, and should head back up, sharply. We've already seen a solid rally off the lows with the Dow up 7.43%, the S&P up 8.02%, and the Nasdaq up 9.52%. But the markets are still down from their all-time closing highs by -10.6%, -14.2%, and -24.7% for the Dow, S&P, and Nasdaq respectively. The recession argument is centered on inflation and the ratcheting up of interest rates to the point of slowing the economy down into a contraction. The recession camp will point to Q1's -1.5% negative print and say we are halfway there. But the no recession argument is that Q1's strength in household spending, fixed business investment, and the strength in the labor market, is a better reflection of the 'significant underlying momentum in the economy,' and that Q2 should see a strong rebound. Moreover, the Fed anticipates GDP to 'advance at a solid pace over the remainder of the year.' There's also a belief that inflation may have already peaked. The latest CPI and PPI reports, while still showing inflation at roughly 40-year highs, did tick down from the previous month. And that's a step in the right direction. It's also worth noting that over the last 50 years, there's never been a recession (aside from 2020's pandemic-induced plunge), when the Fed Funds rate was under 4%. Even with the Fed's expected 50 basis point hike in June and then again in July, that would only put rates at less than 1.9%. And the Fed has suggested that rates will not exceed 2.8% by the end of next year with no further hikes after that. So that still keeps rates well under 4%. I could go on and on, but that's the argument in a nutshell. In the meantime, we'll get another look at the economy today with the Weekly Jobless Claims report. And then on Friday, we'll get the Consumer Price Index, once again, and see if inflation had another downtick or if it went back up. Either way, with valuations at more than 2-year lows, there's lots of bargains out there right now. And it's an opportunity to pick up great stocks at great prices. If you're looking for some new stock picking ideas, then take a look at blockchain. While many associate blockchain with crypto currencies, it's so much more than that. More and more companies are using blockchain in their businesses as it provides an incorruptible digital ledger for all types of transactions and data transfers -- from financial, to shipping, to health records, and more. And the companies using it are as impressive as the companies providing it.
This must-have technology has created an explosive industry and is poised for massive gains. To learn more about how the blockchain technology is shaping the way companies do business, and more importantly, how to profit from it, be sure to check out our latest commentary...
The Top 5 Investment Plays for Blockchain Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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