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The “Heat Map”

December 13, 2017 | Weekly Commentary

Most of the time, the U.S. stock market looks to 3 factors (call them the “pillars” which support the stock market) to support its upward trend – let’s grade each of the pillars.

CONSUMER SPENDING: This grade is a B+ (favorable).

THE FED AND ITS POLICIES: This factor is rated C- (Below average). Average hourly earnings rose only 0.2% in November from October which has a silver lining: while the Federal Reserve will likely go through with its all-but-certain interest-rate increase when it meets this week, it’s unlikely to feel the need to get too aggressive during the upcoming 6 months.

BUSINESS PROFITABILITY: This factor’s grade is A- (very favorable).

OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in OK shape ASSUMING no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 5.  These risks deserve our ongoing attention.

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