A Pause May Be In Order

On this morning’s Trey Ware Show, Karl said despite some good economic numbers, the stock may be due for a rest. But, he still sees new highs soon for the overall stock market.

Trey Ware: Karl Eggerss, eggersscapital.com joining me. So what’s going on in the market this week, Karl? What’s up?

Karl Eggerss: Well, it’s more economic news. We got the Fed meeting this week. We basically, we already know what they’re going to say. But more of this trade talk. You continue to hear these headlines coming out saying, “We’re progressing, but we’re not quite there,” and every time they say, “We’re progressing, and we’re almost there” the market goes up, and then when they say, “But we have a long way to go,” and the market falls a little bit. But really what you have trades. You still have really good economic data, and I still don’t see a recession. I think the recession … People calling for a recession are out of touch because if you look right now I mean, we have people filing for unemployment is near its lowest level ever. We had a really good jobs report. You got banks are still lending. You got manufacturing’s doing great. I don’t see a recession at all. Now, the stock market at this point where it is right now, which is real close to its old high, is forming a technical pattern that I think we could see a little bit of a pullback here in the very, very short run. Even if we got a trade deal done, just because … That’s why its been going up is in anticipation of that, so it’s kind of a buy the rumor, sell the news situation. So, we could see a little pullback here, but I think over the next few months, and maybe even weeks, we do break to new highs for the stock market.

Trey Ware: Really good economic news last week. On Wednesday, it came out that unemployment claims went down to a 50 year low and then you’ve got the situation where we added 196 thousand jobs, but on top of all that too Karl, and this an extremely important component, we had wages go up too. When wages were either going down, or they were stagnant for all the Obama years wages have continued to go up, so you’ve got it matching here. You got a very strong economy, and I think those that are calling for a recession I think they are probably fake newsers out there who don’t like what they see happening right here particularly going into an election season, and they want to try to at least create in a voter’s mind that this is headed in the wrong direction but the numbers don’t lie.

Karl Eggerss: Yeah, the last several weeks, actually the last couple of months, I’ve been saying that the economy was decelerating and all that simply meant was it was slowing down a bit. That doesn’t mean it was going backwards. That didn’t mean it was going into recession. It was just slowing. Well, now what I’m starting to see is we’re starting to see re-acceleration in the last few weeks, and it’s just a blender full of a bunch of data that I look at. And so, again that’s a good thing, and I think the stock market and the economy are in sync with each other where the Fed doesn’t have to be rushed to raise rates. The economy is not slowing and grinding to a halt where we’re going into recession, so it’s kind of this Goldilocks scenario where we’re growing pretty well here, and yet they don’t need to raise rates. They don’t need to feel like they’re in a panic to raise interest rates, and the good news is for those who don’t participate in the stock market at least they’re earning a little bit of interest in their money markets and savings. They’re paying 2-1/2% in general in various places, so that’s a good thing. That’s something that we didn’t see four, six years ago and now we’re seeing that. So, at least if people want to sit around and be safe and conservative, they can do so. If they want to be more risky in the stock market for longer-term growth, that’s working as well. It’s kind of a nice situation right now. But again, I wouldn’t be surprised to see a little pullback here. It can’t go straight up forever.

Trey Ware: Karl Eggerss, eggersscapital.com. Thank you, Karl.

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