Biden’s State of the Union & “Disinflation”, Ep. #164

Welcome back! The Capitalist Investor squad discusses what happened during the POTUS state of the union address, earnings so far in the stock market, & new words that Jay Powell has invented during his interviews. What do you need to know this week to keep up with the economy, the markets, and your money?

Earnings in Stock Market

Earnings seem to be declining, but the market is rallying. One of the thoughts is that the market was discounting even more negative earnings growth and the earnings aren’t coming in as bad as expected. Technology, with the largest weightings in the S&P 500 reported last week and the market shrugged off right in-line if not lower than expected earnings & guidance. Chipotle reported earnings and the market didn’t like it. Are people being more price cautious now? Or are people still swiping their credit cards to keep earnings afloat? 68% of companies continue to beat earnings estimates, but this is the lowest since Q1 of 2020, and then 2013 before then. What should you expect the next couple of quarters?

State of the Union

Liar! Liar! The state of the union seems to be the same every year.. the opposing party shakes their head the entire time, and the party in power stands & sits hundreds of times throughout the speech. It honestly is very similar at this point to a high-school pep rally. At the end of the day, what value do these speeches give? What facts did Biden actually give and what lies did he give? At this point, it seems like the Democrats & Biden are looking at completely different data than what everybody else is looking at. Things like inflation, jobs, oil, taxes, China & oil are all topics that were hit on during the State of the Union. What things did the Capitalist Investor squad digest during the speech and how will Biden’s & Democrats thought process impact your money & your life?

Jay Powell – New Words

Who knew Jay Powell was a comedian.. he had the whole room laughing during his most recent interview. The market seems to always react positively now when Jay Powell speaks, even if it is more hawkish. Does the market not believe anything that the Fed & Jay Powell says now? The new word he is using is “Disinflation”. He has been using the word “Disinflation” a lot lately, and it sounds eerily similar to how he used the word “transitory” a lot and we all know how that turned out. The break down of his recent remarks seems to suggest that the Fed will remain higher with interest rates for a longer period of time, and might even go higher than a lot of people expect. But the market seems to like that news, which means there is some sort of discrepancy between the stock market & the federal reserve.

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