Much like last August, the market seemed to get a bit ahead of itself. The S&P 500 started this upward trend a month ago and hasn't broken that. Seasonally, August and September are two of the weakest months. We haven't seen a double-digit correction, but we have had mild volatility this year. We're just 4% off the peak, and no drop more than 8%, since the rally began last October.
The key question is whether this is just a temporary pullback and a rotation, or this is the beginning of a change in trend and a leading indicator of an upcoming recession?
Inflation is trending lower, economy is still re-strengthening, interest rates and yields seem maxed out. A lot of moving parts right now.
We're at, or near, peak interest rates. Heading into the end of the year the economy's still stronger than expected, but with cooling inflation and resilient labour markets. For her, additional hikes from the Fed and BOC would be causing more inflation, rather than cooling it, at this point.
Most recessions don't come gradually, and things can change very quickly. Seeing those 2 consecutive quarters of GDP contraction, she still expects a mild recession heading into the end of 2023 and early 2024.
Discount makeup brand. Moving well, #3 in the US. Market share hovering around 10%. Makeup sales tend to hold up in a recession. Usually beats on earnings. Target price of $145, so potentially 20% upside. Growth in earnings and sales. Raised guidance. A meaningful opportunity. Likes the business model.
She's been taking profits in the tech space. Sees rotation from growth to value for the second half of the year. Be patient in adding tech. Still holding bigger names as able to weather a recession. Tech usually leads the recovery after a recession. Tech doesn't do as well when interest rates are rising. Will continue to see a bit of a cool off in that sector. Wait to add a position.