July Markets Update

Rather than risk repeating ourselves again (and again) …we’re planning to keep it short as summer burns on, almost literally this week.   

The Market seems to have found a temporary footing.  It is now trading in a “range” – we actually hit the top of the range today and the Market declined a little which is a bit of confirmation that this range is holding for now.   

As earnings season continues to unfold, we’ll see what becomes of the current range.  You guessed it – the Market will either go up or down from here!  Said another way in Market-parlance: we will “break out” to the upside or we will “break down”.   

Earnings season is still in its infancy but thus far, the results have allowed the Market to maintain the established range.  Essentially – the somewhat painful adjustment we’ve seen so far this year to valuations is on par with the current impact to corporate earnings.  So far… keep those seat belts buckled!   

Take heart: according to iCM, this was the third worst start to a calendar year in the past 100 years.[1] A perfect storm of increasing inflation and rising interest rates caused both bond and stock prices to adjust significantly.  So, much like the Covid downturn was a record-setter in terms of the swiftness of both the decline and the recovery, we are back in record territory and you’ve survived!  None of us enjoy this but, as discussed on several prior occasions, this is a necessary adjustment that the Markets will have to make as the economy recalibrates to a world with normalized interest rates and a less accommodative monetary policy.   

Inflation remains an unknown as do the actions and health status of a certain Russian leader.  As of late, inflation was still growing and Ukraine remains war torn.  The labor market remains strong and supply chains have undergone considerable repair (though I doubt any of our homes will ever run out of toilet paper again).  Consumers continue to purchase in spite of rising prices.  At this point, it still appears we are in the heart of the spin cycle – the Market repricing while accounting for all of the aforementioned – but maintaining our range.  The capacity for increased sensitivity to any news flows remains.   

We get asked “when” quite a bit these days.  This is when we wish the crystal ball worked.  It’s hard to know but most believe we have made our way through the majority of the downside already.  That’s not to say we’re done but we have come quite a distance already.   

Stay tuned and, as always, please do not hesitate to reach out with questions or if you foresee any cash needs.  Stay cool!   

Data and rates used were indicative of market conditions as of the date shown. Opinions, estimates, forecasts and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results. 2022-141172 Exp 7/23