The Markets and Economy
The Dow closed lower by 215 points today closing at 31,072. Last week the Dow traded in a wide range but managed to close down only 49 points after a strong rally on Friday. Today’s action was a continuation of the back and forth as the Dow began the day with a 400 point rally which faded quickly when news filtered out that Apple would be slowing its hiring and capital investment going forward. The Dow continues to trade under pressure but is holding at support levels.
Inflation readings last week were worse than expected with headline consumer inflation coming in at 9.1% while wholesale inflation hitting 11.3%. These numbers indicate that inflation is enduring and is showing no signs of abatement. Besides food and energy, rents are rising rapidly as are used car prices. The Federal Reserve is expected to raise rates by 75 at its next meeting later this month. The Fed Beige book is also forecasting a recession in the US as consumers feel the pinch of higher prices and are being forced to cut back because the old greenback just doesn’t buy what is used too unless of course you travel to Europe where the euro has fallen to a two decade low against the dollar.
Bank earnings reports began last week and while JP Morgan did poorly, Citigroup, Bank of America and Wells did good. While defaults are causing banks to increase reserves, net interest margins are increasing as is interest from loans. Banks are in good shape financially with healthy reserves and capital ratios.
Delta Airlines ordered 130 copies of the Boeing 737 Max 10 variant. The news sent Boeing’s shares higher and this is good news to the company just as the Farnborough Airshow kicks off after a two year hiatus. Until the Delta order, Airbus had been outpaced Boeing this year for orders with 259 orders YTD compared to Boeing’s 186 order total. Boeing is having issues ramping up production because of supply chain issues.
Items of Interest
The scouts are currently at Philmont Scout camp in New Mexico hiking the valleys and fording the steams of the Cimarron Range of the Rocky Mountains. While Philmont is a wonderful place the hiking food they provide was a challenge for me. One time after I went there, someone asked me to describe the food and I said it was like having to eat all your meals from what you could find in a 7-11. Everything was processed and packaged.
The Markets and Economy