Household inflation is back in the spotlight. The rising prices of gas and food are sure to show up in the months ahead. A big bounce in oil prices, natural gas prices, and corn, soybean and wheat prices will hit home as consumers are already in a cautious mood.
Stocks markets have traded higher against Spanish 10-year bond yields and are back above 7%. Weekly jobless claims, a string of higher earnings on lower revenue growth and low consumer sentiment are all up.
At first glance, this appears to be a major disconnect, but the market seems to be anticipating more coordinated central bank stimulus both here and abroad. That’s the most plausible and rational explanation for the continued follow-through to the upside for stocks.
We’re also getting into the latter part of summer without the market providing the 15% to 20% correction that was so feared. Now there is serious performance pressure by cash-rich fund managers who are lagging the benchmark indexes, thereby forcing fresh capital into equity markets to somehow make up some ground.
If there’s truth to this assumption, then there’s further upside for equities — and especially those that pay income. Stay connected to the market and opportunities for your investment portfolio.