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Investors: Please OPEN Your Eyes

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The S&P 500 (SPY) seems to be on the verge of an important breakout above the key level of 4,000. That’s because some are applauding the lowering of inflationary pressures. However, the flip side of that coin is that this is happening because of a recession looming on the horizon that provides ample reason to remain bearish in 2023. This is why 40 year investment veteran, Steve Reitmeister, begs investors to open their eyes to appreciate what is happening now. And how to trade this still bearish market environment. Read on below for the full story.


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The early 2023 rally was always too good to be true. That’s because the myopic focus on moderating inflation needs to give way to a broader view of the looming recession which should have investors hitting the sell button in earnest once again. Not just a temporary pause like we saw Wednesday and Thursday.

We need to take a deeper dive on this conflict between investors focused on inflation data versus those looking at the overall economic picture. You know that I stand with the latter group which is why the bearish drum beat is only growing louder in my ears.

The standoff between bulls and bears will be the focus of this week’s discussion.

Market Commentary

The inflation vs. recession battle took center stage on Wednesday when 2 key economic reports were released simultaneously at 8:30am ET: Producer Price Index (PPI) and Retail Sales.

The much lower than expected PPI report got everyone’s attention out of the gate leading to a surge in stock prices over the key resistance level at 4,000 for the S&P 500 (SPY) The next thing you know the downward momentum starts and kept chiseling away all day long. This is how stocks sold off 2% from peak to valley ending the session at 3,928.

Those investors myopically focused on inflation were left scratching their heads.

Those who were focused on the red flags in the Retail Sales report knew darn well why stocks were heading lower. That being another nail in the recessionary coffin for the US economy.

To be clear, inflation is absolutely coming down at a quicker pace than most expected. This does mean that hawkish Fed policies are working. And they may pivot to dovish earlier than expected…but not for quite a while. That message was echoed once again on Friday by Fed Governor Waller when he said:

“…we still have a considerable way to go toward our 2 percent inflation goal, and I expect to support continued tightening of monetary policy”

HOWEVER, the real reason inflation is moderating is because we are now teetering on the edge of a recession. This came through loud and clear from recessionary signals from a myriad of January economic reports like:

  • 48.4 ISM Manufacturing on 1/4 with 45.2 New Orders (reads recession)
  • 49.6 ISM Services on 1/6 with 45.2 New Orders (reads recession)
  • 89.8 NFIB Business Optimism Index on 1/10 (lower reading than during Covid…reads recession)
  • -32.9 NY Empire State Manufacturing Index (lowest reading since May 2020 when the economy was in downright collapse).

And yes, the Retail Sales report that arrived side by side with the PPI report Wednesday morning bodes ill for the state of the consumer. The -1.1% month over month decline is all the more shocking when you realize we are talking about December retail sales…yes, the normally buoyant Christmas shopping season was underwater.

This is a very typical pattern for a recession induced by high inflation. Think about it this way…when you are afraid of rampant inflation, that means if you don’t buy now the price will be far too high in the future.

At first this creates impressive economic growth as demand is pulled forward (buy now). And then a cliff is created as buyers are tapped out with less to spend in the future. That contraction = recession. That cliff is likely what we saw in those week holiday shopping results as well as other early 2023 economic data.

Indeed, moderating inflation is good news in isolation. And it does likely say the Fed will not have to go as high with rates or keep them aloft as long.

On the other hand, please appreciate that this is all happening because we are in month 10 of this hawkish regime that is likely producing a recession that begets lower demand that begets lower prices.

So if it took 10 months to create this outcome, and we are sinking into recession, and the Fed has already said they would keep rates high for “a long time”. then we have to appreciate how long it will take for any pivot to dovish Fed policies to resurrect the economy.

Like end of the year…or 2024. And when you fully appreciate that picture of recession coming before recovery…it makes it all the harder to get truly 100% gung ho bullish at this time.

So does that mean now is the time to be ferociously bearish? Yes and no.

YES…this is the logical outcome from what I said above. Especially given the lessons of history where recessions are the leading cause of bear markets.

NO… is that the market can often have a mind of its own and take a different path. Especially true when computers do more of the heavy lifting than actual human investors. So fear and greed are not quite the same as historical patterns.

Long story short, I expect things to roll further bearish as more investors broaden their focus from just the inflation picture to the overall health of the economy. The more they read recession, and with it lower corporate earnings, the more likely stocks head lower from here.

That’s because the leading cause of bear markets is the state of the economy…where recession = bear market.

So keep your eyes firmly fixed on that economic picture to guide your investing decisions from here. The current clues point to more downside ahead. However, that may not fully take place until after the February 1st Fed announcement where Powell will once again remind bulls that he did not stutter when he said that rates will be high for a long time. And that long time is far from over.

What To Do Next?

Discover my special portfolio with 9 simple trades to help you generate gains as the market descends further into bear market territory.

This plan has been working wonders since it went into place mid August generating a robust gain for investors as the market tumbled.

And now is great time to load back as we deal with yet another bear market rally before stocks hit even lower lows in the weeks and months ahead.

If you have been successful navigating the investment waters this past year, then please feel free to ignore.

However, if the bearish argument shared above does make you curious as to what happens next…then do consider getting my updated “Bear Market Game Plan” that includes specifics on the 9 unique positions in my timely and profitable portfolio.

Click Here to Learn More >

Wishing you a world of investment success!


Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return


SPY shares fell $0.13 (-0.03%) in after-hours trading Friday. Year-to-date, SPY has gained 3.52%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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Entrepreneurship

Southwest Develops Software Fix to Prevent Travel Meltdowns

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Following its disastrous Christmas travel season, which saw the cancellation of 16,700 flights, Southwest Airlines is testing new software fixes — and facing an inquiry from the Dept. of Transportation (DOT) for “unrealistic scheduling of flights.”


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CNN reports that the airline’s existing software system will remain in place. However, changes stemming from Southwest’s review include a new command center team, telephone system improvements, and overall improved preparedness for inclement weather.

In a Thursday call with investors, the Portland Press Herald reports that Southwest CEO Bob Jordan defended the company’s systems and operating plans, saying, “Based on what we know at this point, our processes and technology generally worked as designed.”

Southwest also announced Thursday that it had a third-quarter 2022 loss of $220 million in revenue. At the same time, Jordan assured investors that issues dogging the airline throughout the holidays won’t “ever happen again.”

Southwest had many cancellations over the holidays partly because their system requires crew members to call in instead of updating their availability electronically. On Thursday, the company’s COO, Andrew Watterston, called that “a problem” and then elaborated, “It wasn’t the problem for the situation. It was a symptom of the problem.”

According to Jordan, switching to electronic notification will necessitate changes in pilot and flight attendant labor contracts. CNN says Southwest is currently negotiating to replace existing contracts covering various issues, including pay and benefits.

Despite tech failures, the Press Herald notes that Bob Jordan said Southwest would shell out $1.3 billion for its upcoming upgrades this year. The “recent disruptions,” Jordan said, “will likely accelerate some of our plans to enhance our processes and technology.”

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Entrepreneurship

Southwest Develops Software Fix to Prevent Travel Meltdowns

Published

on

Following its disastrous Christmas travel season, which saw the cancellation of 16,700 flights, Southwest Airlines is testing new software fixes — and facing an inquiry from the Dept. of Transportation (DOT) for “unrealistic scheduling of flights.”


Lowe Llaguno | Shutterstock

CNN reports that the airline’s existing software system will remain in place. However, changes stemming from Southwest’s review include a new command center team, telephone system improvements, and overall improved preparedness for inclement weather.

In a Thursday call with investors, the Portland Press Herald reports that Southwest CEO Bob Jordan defended the company’s systems and operating plans, saying, “Based on what we know at this point, our processes and technology generally worked as designed.”

Southwest also announced Thursday that it had a third-quarter 2022 loss of $220 million in revenue. At the same time, Jordan assured investors that issues dogging the airline throughout the holidays won’t “ever happen again.”

Southwest had many cancellations over the holidays partly because their system requires crew members to call in instead of updating their availability electronically. On Thursday, the company’s COO, Andrew Watterston, called that “a problem” and then elaborated, “It wasn’t the problem for the situation. It was a symptom of the problem.”

According to Jordan, switching to electronic notification will necessitate changes in pilot and flight attendant labor contracts. CNN says Southwest is currently negotiating to replace existing contracts covering various issues, including pay and benefits.

Despite tech failures, the Press Herald notes that Bob Jordan said Southwest would shell out $1.3 billion for its upcoming upgrades this year. The “recent disruptions,” Jordan said, “will likely accelerate some of our plans to enhance our processes and technology.”

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Entrepreneurship

5 Ways to Become a Better Public Speaker This Year

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Opinions expressed by Entrepreneur contributors are their own.

The ability to speak publicly is a skill that everyone can use. From coaches to entrepreneurs and writers, anyone who wants to get out into the world to market what they do needs to be an effective speaker.

This article will discuss five ways to become a better public speaker — five methods for sharpening your raw talents to morph into a more effective communicator overall.

Related: This Is the One Thing You Need If You Want to Get Paid Speaking Gigs

1. Practice in different environments

This tip comes from an exercise that musicians sometimes use while practicing.

The idea is to see if you can replicate your performance no matter where you are. As a speaker, you will encounter all kinds of scenarios and audiences. You have surely had distractions around you, being in front of people with different interests, being under different lighting and noise conditions and more.

Practicing speaking in different environments will force you to get comfortable performing under all circumstances. Without the crutch of your favorite environment, you have to remember your lines and recall cues completely on your own.

Related: 4 Expert-Backed Strategies for Improving Your Communication Skills

2. Produce different kinds of ‘speaking’ content

Another tip for becoming a more well-rounded speaker is to produce a variety of speaking content. Speakers don’t always have to stand on a stage and talk to live audiences.

I create speaking content across many channels — from my website and blog to YouTube and my podcast series. I distribute audio and video recordings of my speeches to my clients and promote them on my social channels. I go live on Facebook and other platforms to speak directly to my audiences that way. You can do the same.

This variety isn’t by accident. Producing these different types of content in the digital space allows individuals to sharpen their speaking skills and reach larger audiences than they could in person.

3. Get active on audio platforms

Here’s a speaking tip that doesn’t involve performing as much as learning from what others are already doing: Get active on professional audio platforms such as Clubhouse and Twitter Spaces to meet with like-minded individuals and discuss relevant topics.

Doing this lets you compare notes with industry counterparts while working on your speaking skills. You will endeavor to communicate with other business leaders and coaches from around the world and all different walks of life.

Related: The Role of Effective Communication in Entrepreneurial Success

4. Take every opportunity to speak

Speak to a group at every available opportunity. I used to wonder how I could speak to an audience when the professional invitations dried up for a bit, and the answer was local service groups.

Toastmasters International, Rotary International, Lions Clubs International and the Freemasons are all great examples of the types of organizations that not only perform good works for their local communities but also welcome speakers and presenters to deliver valuable information to their members.

I find chapters of these groups in many cities and towns that I visit. Having these groups near me allows me to cut down on my travel time and simply makes it more convenient to continue practicing speaking skills while also putting my abilities to good use for my community.

Not only will this help you with your skills at public speaking, but it’s a rewarding experience as well.

5. Work with a speaking coach

Finally, every speaker-in-training could benefit from working with a speaking coach or mentor. These professionals provide their clients with professional tips and feedback on everything from the words they’re using to how they’re delivering them to audiences.

Some speakers wonder why they can’t just rely on their friends and families to provide them with honest feedback, and there are some good reasons for not doing that. Family and friends are kind, but that’s exactly the problem. Speakers need the unrelenting honesty of professional coaches if they truly want to leave their bad habits behind and become stronger.

I hired a professional speaking coach to improve my skills, and I can attest that it pays dividends every single day in my career.

Related: Leading Speaking Coach Shares His Strategies To Get A Flood Of Clients From Webinars And Virtual Presentations

Communication is everything to professionals

Whether it’s in the world of business, non-profits or coaching, speaking effectively is vital to success. Communication means everything to professionals, and those who can’t tell others what they do and what they’re about can’t expect to get their visions too far off the ground.

I followed these five actionable tips for becoming a better speaker, and I came out on the other side as a communicator that I never even thought possible. You will do the same.

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