{"id":53357,"date":"2023-08-26T16:20:41","date_gmt":"2023-08-26T20:20:41","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/opinion-4-reasons-to-start-buying-the-august-stock-market-weakness-and-what-to-buy\/"},"modified":"2023-08-26T16:20:43","modified_gmt":"2023-08-26T20:20:43","slug":"opinion-4-reasons-to-start-buying-the-august-stock-market-weakness-and-what-to-buy","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=53357","title":{"rendered":"Opinion: 4 reasons to start buying the August stock-market weakness \u2014 and what to buy"},"content":{"rendered":"

It\u2019s time to start buying the August stock-market weakness. But keep some purchasing power on hand to take advantage of weaker prices ahead.<\/p>\n

That\u2019s the key takeaway based on insights from economic fundamentals, technical analysis, corporate insider buying activity, and investor sentiment.<\/p>\n

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Investor\u2019s nerves are raw because of all the stock market damage in 2022. Trepidation is understandable. But the current pullback is just a healthy correction in a bull market. This isn\u2019t the \u201cbig one.\u201d<\/p>\n

Let\u2019s drill down on what experts in these four areas tell us to think about the pullback.<\/p>\n

1. No recession ahead<\/strong><\/p>\n

The rise in the 10-year bond yield reflects increasing worries about inflation \u2014 and economic growth that just won\u2019t quit. The concern is the Federal Reserve will have to hike interest rates even more, sparking a recession.<\/p>\n

However, these worries are unfounded, says Ed Yardeni of Yardeni Research. Inflation is actually pretty tame by now. Yardeni points out that excluding rising rents, the consumer-price index (CPI) and core CPI are 2% and 2.5%. \u201cWhat am I missing, exactly?\u201d he asks.<\/p>\n

Rent inflation is leveling off too, according to data from Zillow and Apartment List. \u201cI know with 100% confidence that rent inflation is coming down. The Fed has basically accomplished its goal,\u201d says Yardeni. He\u2019s referring to the Fed\u2019s desire to bring inflation down to 2% by 2025. \u201cEven if energy prices go up, that will be offset by rents,\u201d says Yardeni. Economic weakness in China will also put downward pressure on U.S. prices.<\/p>\n

Another key factor suppressing inflation: Productivity gains. Companies are less likely to pass along input price hikes when they are getting more out of workers because of increased productivity. Productivity jumped 3.7% in the second quarter. This is a volatile time series, but more gains are likely because of huge capital spending by companies looking to cope with rising labor costs. For more details, see my column on this topic.<\/p>\n

Meanwhile, the economy should remain resilient despite all the Fed rate hikes, for three reasons.<\/p>\n