Most investors would look at consumer staples stocks for protection against the whipsaws that the market can bring during cycles. While this theory tends to work over time and has worked over time, it is a widely accepted model. However, markets aren’t a simple model. They are dynamic, and each cycle is different, and today is no exception. This is why the financial sector might be a better place to be when trying to hedge away some of the cycle risk. Banking stocks are in the spotlight this time. Investment banks like Goldman Sachs Group Inc. (NYSE: GS) are highly dependent on the business cycle and interest rates, which drive the volume of investment banking deals, sales, and trading volatility. .
The S&P 500 set another new all-time high after the CPI report confirmed that inflation is cooling. The bad news is that the new highs weren't held, resistance was confirmed, and the risk of a price correction was high because the index is overextended, diverging from its indicators, and overbought. The takeaway for investors is that the uptrend is intact, and a correction is needed to alleviate overbought conditions. It will be the next good buying opportunity to load up on quality stocks.
This week will be busy. The Q2 earnings season started last week with the reporting of most big banks. This week, banking reports will continue and be compounded by a broader array. Critical economic reports, including the June Retail Sales figure, are also due. Retail sales are expected to be flat compared to last month, showing signs of a consumer slowdown that may bleed into the broader economic outlook and sap appetite for risk on investments.
Most investors would look at consumer staples stocks for protection against the whipsaws that the market can bring during cycles. While this theory tends to work over time and has worked over time, it is a widely accepted model. However, markets aren’t a simple model. They are dynamic, and each cycle is different, and today is no exception. This is why the financial sector might be a better place to be when trying to hedge away some of the cycle risk. Banking stocks are in the spotlight this time. Investment banks like Goldman Sachs Group Inc. (NYSE: GS) are highly dependent on the business cycle and interest rates, which drive the volume of investment banking deals, sales, and trading volatility.
Signs of consumers slowing down their spending and falling behind on their bills weighed down shares of the big banks on Friday. JPMorgan Chase and Wells Fargo saw their adjusted profits fall, while Citigroup saw sluggish spending on its credit cards. The major banks have benefitted from higher interest rates for the last two years, but those rates are causing consumers and businesses to slow down spending due to higher financing costs. JPMorgan set aside $3.1 billion to cover potentially bad loans, up sharply from a year earlier, as the bank acknowledged that delinquencies were climbing among some Americans.
The housing market has faced headwinds in recent times, primarily due to the impact of rising interest rates. This surge in borrowing costs has slowed down homebuying activity, leading to a decline in homebuilder stock prices. However, recent economic indicators suggest a potential shift in the market that could benefit the homebuilding sector. The decline in inflation, as reflected in the Consumer Price Index (CPI), has fueled optimism about the Federal Reserve potentially lowering interest rates. This potential policy shift holds significant implications for the housing market and presents...
Joemar Flores, a spindly 28-year-old, gestured across his family's farmland, nestled between a steep hill and a river, and expressed gratitude for the rice paddies in the distance.They're still there, producing food and an income for him, thanks in part to a novel form of insurance that is increasingly being used to help vulnerable populations build resilience to climate change.Back in 2022, the young father of a toddler and a newborn faced ruin when heavy rains and violent winds decimated his rice crop."We were very discouraged," he recalled, as he pointed to a photo of the destroyed paddies....
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