What We Expect in the Coming Quarters
Wednesday, July 4th, 2007
By Mitchell Clark, B.Comm. for Profit Confidential
Well, it’s finally July and the end of the calendar second quarter. Some numbers have already come in from corporations whose fiscal quarter recently ended, and the earnings are solid.
The stock market needs a little distraction from inflation and interest rate woes. It will be particularly interesting to read how large corporations feel about the economy and its prospects for the second half. As is usually the case, most businesses expect the second half to be stronger than the first half.
Investor sentiment is likely to improve over the next month, and I wouldn’t be surprised to see a strong showing from the major stock market averages. Investors don’t really care too much about inflation. They only care if and when the Federal Reserve changes interest rates. So, the signal from the central bank is steady as she goes with current policy. If we get decent corporate earnings numbers, why shouldn’t the market go up?
If we get a small correction in stock prices, which wouldn’t be a bad thing, it’s likely to occur in the current quarter after earnings season. With the economy expected to accelerate in the fourth quarter, this might provide an opportune time to be taking on new positions in the stock market.
I guess I’m cautiously optimistic about the market over the near term. I’m still worried that inflation will compel the Federal Reserve to act on interest rates, and although this wouldn’t be the end of the world, it would sap a lot of enthusiasm out of the marketplace.
No one knows how things will turn out in the bottom half of this year, but it often isn’t wise to go against the trend. So far this year, stock prices have performed surprisingly well.
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Tags: inflation, interest rates, stock market, U.S. economy
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Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
