Weekly Summary

“I Still Haven’t Found What I’m Looking For”

“I Still Haven’t Found What I’m Looking For”

. We hope that the Fed will be patient enough so that they might see a slower pace of inflation that might allow for a “pause” in rate hikes prior to “over-tightening.” We assume no rate cuts in 2023. In our opinion, most of the economic data that we have analyzed recently, including this week’s data, points to slowing U.S. economic growth along with a lessening of inflationary pressures.

“Born to Be Wild”

“Born to Be Wild”

Our general investment approach remains the same as depicted in last week’s commentary. We maintain our preference for big cap quality stocks with good balance sheets, relatively stable cash flows and stable margins. Volatility across sectors continues to be supportive of a diversified portfolio for long term investors. We expect volatility across virtually all financial markets to continue.

“Wake Me Up”

“Wake Me Up”

After Powell’s remarks this week, we expect the Fed to be more data dependent and more forward looking. All other things being equal, this should reduce the chances of the Fed “over-tightening.” But given the Fed’s forecasting record, we remain uncertain.

“Don’t You Worry”

“Don’t You Worry”

We believe that this week’s trading and movements in financial markets confirms that interest rates and their volatility continue to be the principal drivers of equities and currencies. The importance of downwardly revised earnings and margins that we have been anticipating have been prominently on display this week as well. The muted spillover effects from negative “surprises” from even some of the largest MegacapTech stocks has been an encouraging sign for the overall U.S. equity markets. Everything else being equal, seasonal factors could be very conducive for favorable U.S. stock performance in the near term.

“Good Feeling”

“Good Feeling”

Our general investment approach remains the same as depicted in last week’s commentary. We maintain our preference for big cap high quality stocks with good balance sheets, relatively stable cash flows and stable margins. Volatility across sectors continues to be supportive of a diversified portfolio for long term investors.

“Otherside”

“Otherside”

We assume continued volatility across virtually all financial markets. We maintain our belief that selective stock picking will continue to play a critical role in outperformance. Seasonal factors could also affect financial markets’ behaviors. We anticipate that downward revisions ibn Q3 results could further pressure equities.

“Counting Stars”

“Counting Stars”

Our general investment approach remains the same as depicted in last week’s commentary. We maintain our preference for big cap high quality stocks with good balance sheets, relatively stable cash flows and stable margins. Volatility across sectors continues to be supportive of a well-diversified portfolio for long term investors. On a selective basis, we remain favorably disposed towards energy, health care, financials and growth stocks – including selected high quality tech stocks.

“Hot N Cold”

“Hot N Cold”

. We understand that the Fed’s latest planned trajectory of hikes in the federal funds rate has increased the probability of a U.S. recession by sometime next year. It has also lowered the risk/reward calculus for the purchase of equities. As we have advocated this entire year, we would only buy selected securities on market downturns. We maintain our belief that selective stock picking will continue to play a critical role in outperformance.

“Whatever It Takes”

“Whatever It Takes”

We are not at all surprised by the extreme volatility in financial markets post the Fed meeting this week. The Fed’s new approach has lowered the risk/reward calculus for equity levels. Long-term investors should be prepared to live through a period of increased volatility. Advantageous buying opportunities will continue to appear on a selective basis. Prudent stock picking should lead to outperformance over time. Patience will be important in seeking to achieve positive returns.

“Baby What You Want Me to Do”

“Baby What You Want Me to Do”

Our general investment approach remains the same as depicted in last week’s commentary. We maintain our preference for big cap high quality stocks with good balance sheets, relatively stable cash flows and stable margins. Continued volatility among sectors this week is supportive of a well-diversified portfolio for long-term investors.