A ‘Taper Tantrum’

Stocks rally, but end the week a bit lower, even as they bounced higher on Friday, negating a downward trending. The big topic of conversation this past week was concerns over the general economic outlook, a slowdown in China’s growth (which could impede global recovery) and the uptick in Covid-19 infections. Tapering, the term used to describe the winding down of the Federal Reserve’s bond purchases, was a major concern for investors this past week- even though we all knew that quantitative easing is living on borrowed time. The market never ceases to amaze us reacting to a non-surprise-tapering. But it did. Worries about the central-bank policy also cut into investors’ appetites for riskier assets, analysts say. The last Federal Reserve meeting in July showed most officials believe ‘they’ should begin scaling back ‘easy-money’ later this year. Many investors credit the market’s climb over the past year in part to extraordinary levels of central bank support. While the S&P 500 and Nasdaq Composite managed to rise Thursday and Friday, their gains weren’t enough to offset declines from earlier in the week. Losses were particularly steep among shares of economically sensitive companies like banks, materials companies and energy producers. “We’re looking at a period of very strong, but also very uneven global growth over the next couple of months,” said Hugh Gimber, a strategist at J.P. Morgan Asset Management. “The government reaction now looks very different across different parts of the world.” The big question weighing on investors’ minds is how much inflation, which has jumped this year, will continue rising in the coming months and years. ‘If inflation does prove to be more stubborn, it could change how quickly the Fed has to tighten once they get going, Mr. Gimber said. The Dow Jones Industrial Average, for the week lost 1.1%, while the S&P 500 slipped 0.6% and the Nasdaq retreated 0.7%. The Russell 2000 closed at 2167 up 35 points or 1.65%, a very indicative measurement of smaller cap companies.

Commenting on the commodities market, U.S. crude oil slipped $1.37 or 2.2%, to $62.32 a barrel, logging its seventh straight session of declines. Oil prices were ‘stung’ this week by the strengthening of the dollar, which tends to make the commodity more expensive to holders of other currencies. Copper prices, which are sensitive to changes in the outlook for manufacturing activity, took another leg lower as well. Lumber has stabilized for the near term, hovering in the $475.00 per 1000 board feet, after a volatile market in the spring, reaching a near high of $1.700 in May, 2021. China’s Shanghai Composite closed down 1.1% and Hong Kong’s Hang Seng slipped 1.8%, capping off a tumultuous week. The sell-off in Asia this week was sparked by regulators in the country stepping up their scrutiny of internet-technology companies. Concerning for U.S. investors as many securities tradable here are under immense pressure.

AMAZON Versus WALMART….Two titans square off, each seeking total dominance, each dipping into each other’s territory, each coveting ‘that’ retail crown. The two-decade war of Amazon vs. Walmart just heated up, with no end in sight. The fight for retail and e-commerce dominance holds big stakes for both Amazon and Walmart stock. Amazon plans to construct it first of many retail stores according to the Wall Street Journal. The stores would represent Amazon’s first intrusion into physical retail outlets and thus step up its game…against Walmart. Amazon’s 30,000-square-foot stores, which will debut in California and Ohio, are less than one-third the size of Walmart’s conventional outlets. They’re about one-sixth the size of Walmart Supercenter stores. According to data compiled by FactSet and reported by the New York Times on Tuesday, Amazon’s sales, and those of third party sellers on its platform. eclipsed Walmart’s over the year ended in June. A glance at the stats of Amazon and Walmart, U.S. stores, Walmart 4473, Amazon 589, employees, Amazon 1.3 million, Walmart 2.3 million, distribution centers, Amazon 185, and Walmart 158. Consumers spent $610 billion at Amazon from June 2020 to June 2021. In that same period, shoppers spent $566 billion at Walmart, the report said. “It’s noteworthy because what it shows is that growth in the digital space has been huge,” said Bill Bishop, who uses the title of chief architect at Brick Meets Click, a research firm focused on the retail grocery market. Both companies are expanding aggressively in the health care business, where victories could have a substantial benefit in customer loyalty and revenue. It is just one more step in the Amazon vs. Walmart drama.


Brian Cornell, CEO of Target, which with other retailers reported strong sales at stores. Barron’s “We believe that America still embraces stores.”

Brian Belski, BMO Capital Markets strategist, commenting on ‘taper tantrums’ Barron’s More important, though, the original taper tantrum wasn’t nearly as bad as its reputation suggests. Yes, stocks tumbled 5.8% fro May 22nd through June 24, 2013, but those losses were made back quickly, notes Mr. Belski. “As such, the so-called taper tantrum of 2013 actually represented a buying opportunity in U.S. stocks, ” Belski` explains. Noting that gains have been larger during periods when the Fed is buying bonds than when it isn’t.

Joe Biden, President USA WSJ “I can not promise what the final outcome will be or that it will be without risk of loss, but as commander-in-chief I can assure you that I will mobilize every resource necessary,” Mr. Biden said during a speech in the East Room of the White House Friday.

Claudia Sahm, economist, Stay-At-Home Macro Barron’s “I give credit to Fed Chairman Jay Powell and other Fed officials for holding firm. It helps that Wall Street is with them and agrees that inflation will come back down soon. That means a lot, because Wall Street has skin in the game. The Fed moves very slowly. And when it moves, it doesn’t move back in a heartbeat, because it has done all this work to justify moving.”