Connect with us

News

Market sentiment has flipped again

Published

4 years ago

on

0238512_M_O_Connor_1000x600.jpg
.

By Michael O’Connor

Last week, the three-week losing streak that saw the S&P 500 drop over 8% ended as markets bounced from seemingly oversold positions.

Investor sentiment flipped as the recent pullback created buying opportunities.

The S&P 500 rose nearly 3.7%, while the NASDAQ’s gained 4.1% to help it recover some of the 11% it lost in recent weeks.

But on Tuesday of this week, the market sentiment flipped again.

The August inflation print, widely expected to show falling US inflation, showed the opposite.

Falling gas prices and improving supply side pressures were not enough to offset price increases in both food and shelter.

CPI climbed 0.1% month over month in August, accelerating from 0.0% in July.

Even though we’re talking about just one report, it’s enough to raise doubt about inflation being under control which has knock-on effects regarding how aggressive the Fed needs to be as they attempt to cool the economy.

While this is undoubtedly a negative indicator that was always going to trigger a sell-off in the short term, if we zoom out, I’m not sure it considerably changes the position we are in.

The Fed was going to stay on track to tighter monetary policy whether inflation was 8.1% (expected) or the 8.3% reported.

So if the long-term picture has not changed dramatically, but prices are falling, what does this mean for investors?

Outlook

Everything seems relentlessly bearish at the moment.

The recession obsession is everywhere.

There are obvious reasons to be fearful, you hear them every day, but this isn’t the beginning of the end.

Contrary to general market consensus, I think we are close to peak bearishness with much of the negative outlook for the economy now priced in (the Nasdaq composite index is down 26% so far this year).

We are not quite there yet. The lows in June will likely be retested over the coming days/weeks, but I don’t expect much pain past this point.

As such, investors shouldn’t look at this current selling as a reason to run for the hills. Instead, view this as an opportunity to invest in your favourite companies at discount prices.

To quote Warren Buffett:

“Our goal is more modest: We simply attempt to be fearful when others are greedy and greedy when others are fearful.”

Are we in a downtrend where rising interest rates and inflation pressures are forcing investors to reassess equity valuations?

Yes.

Is this repricing within the realm of standard market conditions as we reset our expectations following a decade of relentless Fed support?

Yes.

Is the apocalypse coming?

No.

Despite the headlines, It’s not all bad news.

Company earnings have held up well
Labour markets remain strong
Supply-side inflation pressures have eased,
Interest rates hikes are likely to slow following the FOMC meeting this month
This year’s pullback has stripped much of the excess out of markets
As I have discussed previously, we are unlikely to have the same rate of recovery we experienced when the Fed was funding asset price inflation.

Market uncertainty could result in horizontal trading for quite some time, but all is not lost.

Without a new macro shock, I don’t see markets falling significantly below the lows set in June.

Time to put your money to work.

To learn what companies to invest in and to direct access to my personal investment portfolio go to www.theislandinvestor.com.

Related Topics:
Advertisement

News

West End and Great Southern team up for theatre experience

A powerful production of one of Ireland’s most celebrated contemporary plays is coming to the Killarney stage this month. In an exciting joint venture, the West End House School of […]

Published

5 hours ago

on

21 July 2026

By

A powerful production of one of Ireland’s most celebrated contemporary plays is coming to the Killarney stage this month.
In an exciting joint venture, the West End House School of Arts has partnered with the Great Southern Killarney to offer audiences an unrivaled theatre experience.

The West End Players Ensemble will present By the Bog of Cats, Marina Carr’s haunting and critically acclaimed masterpiece, on Wednesday, July 29 and Thursday, July 30 at 8:00pm at the town centre hotel.

Charlie Hughes, the show’s director and Head Tutor at West End House School of Arts, expressed great pride in the milestone, stating he is “so proud that our five years in operation here in Killarney have been able to support and develop such talented local actors to stage this production”.
Set against the stark beauty of the Irish midlands, the compelling drama tells the unforgettable story of Hester Swane, a fiercely independent woman determined to hold on to her home, her daughter, and her place in the world. Rich in Irish folklore, dark humour, and unforgettable characters, Carr’s masterpiece explores themes of love, betrayal, identity, and the enduring pull of the past, offering an unflinching portrait of Irish society.
Maria O’Meara, Director of Rooms at Great Southern Killarney, welcomed the production, saying, “Welcoming such a gripping and powerful production into the hotel is a wonderful way to celebrate creativity and culture. Creating memorable experiences has always been at the heart of the Great Southern Killarney, and we are proud to host an evening that brings people together through the arts.”
Theatregoers can enjoy an exclusive pre-theatre dining experience. A special menu will be available at the five-star Great Southern Hotel’s Arbor Restaurant for €55 per person. Dining reservations can be secured in advance by calling 086 663 8000 or by emailing events@greatsouthernkillarney.com.
The play runs for two hours, including a brief intermission, and is suitable for audiences aged 16 and over. Show tickets must be booked in advance online via Eventbrite at https://bythebogofcats.eventbrite.com

Attachments

Continue Reading

News

Fans urged to leave points on field

Published

5 hours ago

on

21 July 2026

By

Fans urged to leave points on field

Kerry fans travelling to Croke Park for the All-Ireland Senior Football Final on Sunday, July 26th, are being urged to keep road safety as their top priority and leave the penalties and points to the players on the pitch.

With thousands of supporters set to travel hundreds of kilometres by car, bus, train, and plane for the showdown between Kerry and Mayo, Kerry and Mayo County Councils have joined forces to roll out a joint road safety campaign.

The initiative features a GAA-inspired advert for local radio and social media. The campaign highlights that while speed and impact play a key role for a footballer on the pitch, the consequences of speed behind the wheel carry a very different and dangerous outcome. Both local authorities emphasize that road safety is a team effort, ensuring everyone arrives safely to enjoy the match and returns home without incident.

Kerry County Council’s Road Safety Officer, Declan Keogh, warned of the need for vigilance during the long journey to Dublin.

“There will be a lot of excitement and distractions on the journeys to Croke Park. We are asking motorists to stay focused, keep their eye on the road and ensure everyone in the vehicle is wearing a seatbelt. Long journeys can be tiring for drivers, so short breaks should be factored into the journey plan. Whether celebrating or commiserating after the game, drivers should never drive under the influence of alcohol or drugs. Staying safe on the road is the main goal.”

Supporters on both sides are being reminded that regardless of the result on the pitch, making safe decisions on the road ensures a winning outcome for everyone involved.

Attachments

Continue Reading