Stock Power Daily — Weekly Wrap: Fun While It Lasted…

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Weekly Wrap:
Fun While It Lasted…

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Chad Stone,
Managing Editor

Dear Loyal Reader,

Can we go back to January?

In all seriousness, last week was a bit of a reality check after markets surged out of the gate to start 2023.

After Friday’s inflation-driven market bloodbath, all major indexes are trending lower once again.

That all could change, of course. It wouldn’t shock me to see massive gains again tomorrow. That’s the market we’re in. (And there are individual stocks with incredible potential. You can see some we’ve highlighted in Stock Power Daily below.)

But there are two huge things to keep in mind as 2023 continues:

  • Inflation is still rampant. The Federal Reserve’s preferred inflation index rose 0.6% in January, and it’s still 4.7% higher than it was a year ago (this caused the Friday market shellacking I mentioned above).

  • It means the Fed isn’t done raising interest rates.

We need to be ready for more pain ahead.

I was on a call with our chief investment strategist, Adam O’Dell, and the rest of the Money & Markets team on Thursday. We were hashing out our plans for the coming weeks.

Adam is not a permabear. But he’s also not blind to what’s going on. He’s a self-proclaimed “realistic opportunist.”

Adam pointed out the relationship between bull and bear markets.

He was talking about the epic decade-long bull market that ended in 2021. Major indexes soared higher, hit a blip during the COVID crash and then soared higher once again.

Then the bottom fell out last year. We’re all aware of that.

But what struck me was Adam’s point about the transition from bull to bear (or vice versa).

He asked if the market movement since the corona crash made sense — a strong bull market turning into a weak bear market followed by a reversal and climb higher.

The short answer is: No.

The rally that followed the COVID crash was incredible, but that was when the Fed was playing fast and loose, printing money like there was no tomorrow.

Things are different now.

The Fed’s money tap is turned off, and it’s draining liquidity out of the market as fast as it can. Just look at its balance sheet — which has a long way to go to even hit 2020 levels:

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(Click here to view larger image.)

A tight Fed means growth (and stock returns) are going to be harder to come by from here.

Interest rates are also three times higher than they were just three years ago.

And company earnings are painting a picture of a weaker economy.

You’re right to be worried about what comes next.

But that Thursday call reminded me that we’re in good hands. Adam O’Dell, Matt Clark, Mike Carr, Charles Sizemore and everyone else that I work with are here to be a guiding light, show you what’s really going on and get you in position to take advantage when things actually take off again.

Keep scrolling to see how with some recent highlights from the team below.

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See what you might’ve missed in Stock Power Daily and elsewhere below:

  • Buy 1 Stock for Mexico’s Construction Boom: Matt noticed an incredible construction trend south of the border. This 99-rated stock is well set to benefit.

  • What You Pay for What You Get: Adam’s piece in The Banyan Edge is a must-read. He goes into why the market has shifted to be value-friendly — and how you can take advantage going forward.

  • The New Farming Age: Precision agriculture is bringing farms further into the 21st century. And this company is at the forefront of this movement.

That’s all for me this week.

Until next time,

Chad Stone
Managing Editor, Money & Markets

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