Melissa Armo, founder and owner of The Stock Swoosh, joined Cheddar News to discuss this week's markets which were little changed in trading as investors digested the latest corporate earnings results as concerns over a coming recession grow.

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Analyst Discusses Latest Market Trends as Recession Fears Grow

I want to bring in Melissa arm, founder and owner of the Stocks. Melissa, it's good to see you on this Friday. What do you make of the stock market? Well, not much right now, to be honest with you, we are caught in the tightest range that I've ever seen for the last 15 years since I've started trading for 15 solid days straight. The market and the Q Q Q s has been in a very tight range. We are seeing a lack of commitment or no commitment or no conviction from buyers because the market isn't lifting higher out of the range and the market isn't going lower below the range either. Like we had tests earnings yesterday which fell. Tesla got down. The market should have fallen, fallen off the planet, but it didn't. Then we had bank earnings that came out when earnings season started. We had great earnings from J PM. The market should have broke out higher and rallied through the area couldn't do it then either. So this market is driven 100% right now by what the feds gonna say, what the fed is going to do. So the market may be in a range even though there's earnings in the next two weeks before the meeting, the market may stay in the, with good earnings, bad earnings because the market really doesn't care about earnings. The market cares about what the fed is going to do. And again, they're probably going to raise rates. Ok. Well, based on the data that we've seen Melissa on the jobs front, the inflation front in the past month or so since the feds last meeting in mid March. Do you expect that the fed does change its tune that it says anything different at the next meeting? The next decision that is on May 3rd. No, because they're still trying to fight inflation because we still have high inflation. And the Fed's only tool for that in their mind really is continue to increase rates, which is of course, going to do what it's going to slow down lending, it's gonna slow down the economy. And that's unfortunate and, and, and, and already they've already been talking about the fact that we're gonna go into recession towards the end of 2023. In fact, uh you know, Elon Musk did an interview on another channel the other and said, yeah, we're going to go into a recession. So the fact is that when you have all of these things coming at the market at once, high interest rates, uh people are scared because of the bank collapses and then you have this market in this tight range which isn't showing conviction. People are worried and they don't know what to do about their investment. So people have moved a lot of money around with the bank, with the banks going under. People are worried about the FDIC 250,000 limit and you have a lot commitment from people overall deciding to buy more in their investments even in something like Tesla, which is a great company that fell. You know, sometimes when stocks fall like that, they get a lift, people say, oh, this is a great place to buy. It's a perfect price. It's a great price, but it fell, it fell yesterday. In fact, it could even fall even lower. So you have very strong companies right now that aren't reacting positively and even Goldman that came out and gapped down on earnings and rallied really didn't go anywhere higher. So let's say we do get a recession. I mean, we've been talking about a recession since the start of 2022 right? And we did technically actually have a recession to back to back quarters of negative GDP growth even though the administration said the jobs market is holding up. This isn't a typical recession. What does that mean for the stock market? Can the stock market over time grind higher or does the recession create a red flag predicting that stocks would go down? Well, typically you don't always have the economy and the stock market do the same things. So you could have a great economy and the stock market fall, you could have a bad economy and the stock market rally. So that's let me just put that out there. But as far as the overall market goes, I think that the last time that we saw brand new all time highs and A Q Q Q S was November of 2021 not 2022 2021. So we're talking 18, 20 months ago. As far as the spy at the beginning of 2022 we have brand new all time highs, but we went all of last year without seeing new highs. And this year we may go to the rest of 2023 without and if banks are going to slow down lending, ok. That will have an effect on small businesses, large businesses, commercial businesses. And as you've seen even this week, meta laying off people companies since the beginning of the year have been laying off people because they are predicting that we're gonna up as far as economically and what happens when you have the banks tighten up on lending. So people want to buy stuff, then they tighten up the lending. They're paying more in interest rates or they lower their credit card limits. What happens when people want to go buy properties or mortgages and want to get a mortgage, they can't afford as much. So, ultimately, it slows down. Then the housing industry, when you have lending, slowing down, you have all types of businesses that borrow, whether it's commercial lending, whether it's lines of credits and that slows down or it costs more. And so if sales are going down for businesses and lending is going up again, you're gonna, you're gonna, you might have some companies that are laying people off or tightening up or even going out of business. And so as far as the stock market, the reaction to the market goes, it wants to see the fed ease up on interest rates until the fed makes up their mind that they're going to lower rates, which I don't think they're gonna do in 2023 the market isn't going to react positive. So we could go into recession, the economy could go to a downturn, but the fed could lower rates and the market could lift. I'm not saying that's going to happen, but I'm saying that would be a scenario with not a good economy but a good market. It is tricky sometimes. That's for sure. Common sense doesn't always necessarily play out right between the two Melissa arm, founder and owner of the stocks. Wish I Melissa. Thank you.