Is the Reflex Rally Over?

(5/18/22) Target and Walmart reporting less than expected earnings, and missing by a mile, as they cite higher price pressure and building inventories. This would suggest we have likely seen the peak of inflation, along with slower consumer activity--both are pre-recessionary indicators that are also disinflationary. Target and WalMart stocks are consumer bellwethers, telling us now that consumption is, indeed, slowing down as inflation begins to impact consumer buying habits. As consumer spending counts for 70% of economic growth, this does not bode well for corporate earnings in the second half of the year. This will also weigh on S&P pricing later this year. Over the past several days, markets have bottomed and turned back upwards, stringing together four positive days. Closing higher than where we open today will indicate a continuation of a positive trend. The point is to use the rally to sell those laggards to reduce portfolio risk.
Hosted by RIA Advisors' Chief Investment Strategist, Lance Roberts, CIO
Produced by Brent Clanton
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