Good Morning,
I hope everyone had a great weekend!
Markets reached fresh record highs last week, driven primarily by a combination of strong Q2 earnings and a softer than anticipated July jobs report. We continue to be in what has become a familiar "bad news is good news" market environment, where weaker employment data lowers expectations of a Federal Reserve rate hike in September.
This week will be particularly important in that regard, with the latest CPI report scheduled for release on Wednesday. My personal view is that the Fed will likely leave rates unchanged next month, but I believe market momentum could be significantly influenced by the results of Wednesday's inflation report. We will also receive the latest retail sales report on Friday.
From a fundamental perspective, I remain constructive on the market outlook, with the price of oil continuing to be the most significant catalyst to monitor. Given Berkshire Hathaway's value oriented investment approach, I find it notable that the conglomerate purchased nearly $20 billion in equities during Q2, marking the first major investment activity under Warren Buffett’s successor, Greg Abel.
All things considered, any near-term pullbacks in this market should likely be viewed as buying opportunities given the current market backdrop and overall setup.
As always, please don't hesitate to reach out with any questions or comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!