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Stocks fell last week after hawkish comments by Fed Chair Jerome Powell and data showing another month of jobs gains. We see the Fed hiking through 2022.

For the month of August, the Morningstar US Market Index fell 3.83%. The best-performing sector was energy, up 3.13%. The two worst-performing sectors were real estate, down 5.96%, and technology, off by 5.77%.

Global financial markets continued to sell off on hawkish rhetoric from the Federal Reserve and on the realization that rates will likely be higher and in place for a longer time horizon.

The S&P 500 lost 4%, the Dow fell 4.2%, the NASDAQ tumbled 4.4%, and the Russell 2000 gave up 2.9%.  The yield curve inverted this week, with much of the selling on the front end of the curve coming before Friday.

Ten of 11 industry sectors declined for the week, with technology and communication stocks down the most. Only energy stocks gained on rising oil prices.

The S&P 500 lost 1.2%, the Dow fell by 0.2%, the NASDAQ gave up 2.6%, and the Russell 2000 shed 2.9%. The US yield curve steepened but remains inverted.

The biggest gains among individual stocks were energy companies, as natural gas prices rose about 5%. Companies in the electric vehicle charging infrastructure space saw their stocks decline.

We see company earnings deteriorating amid a rotation in consumer spending and a sputtering restart. This is partly why we remain cautious on stocks.

BTIG Technical analyst Jonathan Krinsky noted that since 1950 a retracement greater than 50% off the lows has never gone on to make new cycle lows- so perhaps we’ve seen the worst of this bear market.

While inflation remains extremely elevated by historical levels, data released from the Labor Department on Wednesday showed the Consumer Price Index was unchanged in July from June. Energy prices, airline fares, and used car prices all dec

U.S. data last week showed strong job creation but still low labor participation. Stocks lost steam and bond yields spiked as markets priced in more Fed hikes.

Despite a cautious start to the week, US equity markets posted gains for the third week. A tepid ISM manufacturing report coupled with uncertainties surrounding House Speaker Pelosi’s visit to Taiwan initially keep investors sidelined.

Following this market sell-off, future returns from equities look more promising than they did just six months ago.

Stocks rallied and yields fell last week after markets concluded the Fed’s pace of rate hikes will slow. We are less sanguine and see a dovish pivot only later.

Investors faced the busiest week of the year as 175 companies representing 50% of the S&P 500’s market capitalization reported 2nd quarter earnings. The results were mixed and produced drastic swings in share prices.

From our vantage point, better yields across fixed-income and lower-valuation multiples within equities make markets more attractive today than they were a year ago.

Markets are pricing another 0.75% rate rise by the Fed this week. We think the Fed will overtighten rates and cause acute damage to growth before pivoting.

Stocks and bonds have had a tough start to 2022, falling together at the same time. This is one of the most uncomfortable market scenarios, but the silver lining is that it has created opportunity.

Many cautious investors are scared, which is a rational behavioral response. Given the overarching questions about capitalism and political freedom, many are rightfully fearful about the uncertainty ahead.

The S&P 500 gained 2.5%, the Dow rose 2%, the NASDAQ added 3.3%, and the Russell 2000 tacked on 3.6%. The volatility continued in the rates market as the 2-year note yield fell by fourteen basis points to 2.99%.

Relentless U.S. inflation last week signaled a big rate hike by the Fed later this month. Long-term yields fell amid fears rate hikes may trigger a slowdown.

Dividends have held up quite well, despite concerns around the broader economy. For many sectors, expectations for pay outs have actually increased over the quarter.

It was an extremely busy week on Wall Street with a full calendar of economic data and the start of 2nd quarter earnings. Growth concerns fostered more selling in equities and commodities while the long tenures of the yield curve rallied.

Consensus estimates show corporate earnings increasing about 10% in the next 12 months in the face of what appears to be all the hallmarks of slowing economic growth.

U.S. inflation is in laser focus this week. Persistently high monthly inflation rates could cement the case for a 75-basis point Fed rate hike later this month.

The consensus expects CPI to come in at elevated levels, according to FactSet: 8.8%, slightly higher than the 8.6% reading in May.

Commodities funds offer another inflation hedge. Commodities prices, which are sensitive to economic growth, make up an important part of inflation. Commodities funds can capture spikes in commodities prices that precede inflation increases

Commodities prices have spiked as demand from the restart clashed with tightening supply. We see the war and net-zero transition keeping prices high.

Market Outlook From Our Partners At Foundations

Darren Leavitt

Tuesday, July 5, 2022

Markets took a step back after the prior week’s impressive rally. The same culprits showed up to dampen investors’ appetite for risk assets- growth concerns, inflation, and hawkish central bank rhetoric.

As always, one critical variable is the state of the jobs market, and this coming week will bring the June employment report. Forecasts center on job growth having slowed to 270,000 last month, according to FactSet.

Poor activity data reinforced slowdown fears, resulting in falling yields and rising stocks last week. Persistent UK inflation caused worries of overtightening.

The Fed lifted rates by 0.75% in a rush to normalize policy, its biggest hike since 1994. Other central banks joined, sending shockwaves through markets.

Stocks fell and yields jumped last week on news of persistent U.S. inflation and rapid euro area rate hikes, showing markets are primed to be hawkish on rates.

The U.S. added 390,000 jobs in May – a number that was matched by new entrants to the labor force. This shows the labor market is not as tight as feared.

We are now seeing the beginning of a potential recovery, as stocks bounced 6% over five trading days last week.

Stocks bounced back on hopes the Federal Reserve can soon pause rate hikes. But we don’t expect a sustained rebound until the Fed takes a clear dovish turn.

U.S. PCE inflation data this week are expected to show pressures are slowing. We think inflation will settle higher than pre-Covid levels.

The unabated price declines this year in traditional “safe assets” like U.S. treasuries and corporate bonds is really breathtaking. The coincident selloff in stocks makes this nothing short of a generationally difficult environment.

Climate risk is investment risk, and the narrowing window for governments to reach net-zero goals means that investors need to start adapting their portfolios today.

U.S. inflation data this week could point to increasing core inflation pressure amid higher services inflation and housing costs.

Market Outlook From Foundations

Darren Leavitt

Monday, May 9, 2022

As expected, the Federal Reserve increased its policy rate by 50 basis points and laid out a plan to normalize its balance sheet over the next several months.

Yields on 10-year U.S. Treasuries rose to near 3% last week, levels not seen since late 2018.

Market Outlook From Foundations

Darren Leavitt

Tuesday, May 3, 2022

Economic data showed inflation running hot in multiple data series. Data also showed a slowdown in manufacturing and services while the labor market continued to be tight.

Enjoy this guest post by Chadd Mason, CEO at The Cabana Group, one of our investment partners here at AMG, Inc. Stock markets around the world are trying to stabilize after the historic drop we have seen this month. Swings of 4% a day...

Staying the Course

Andrew Nida

Monday, March 30, 2020

There’s a reason that investors tend to only hear about “looming” market doom or “imminent” market growth. While many news outlets have incentive to draw viewer attention with wildly bullish or bearish...

Enjoy this guest post by Chadd Mason, CEO at The Cabana Group, one of our investment partners here at AMG, Inc. On behalf of everyone here at Cabana, I want to wish our clients, investor partners and friends good health and peace at...

Equity markets around the globe bounced back from the sell-off we had in August. Uncertainties around trade continued to be in focus for investors as the US and China countered each other’s policies. The continuing saga of Brexit...

Seeing as we are nearly halfway through the year, I believe it is worthwhile to take a moment (or two) to review the asset classes we invest in and how they are impacted by various market indicators. Obviously not every account that we...

I hope everyone enjoyed some time off with friends and family over the long holiday weekend. I also want to take a minute to acknowledge the thousands and thousands of men and women who have bravely served our country - especially...

Domestic and International equity markets continue to digest the impact of the U.S. and Chinese tariffs on GDP across the world. After dropping more than 5% during the first few weeks of May, there was a three-day bounce at the...

Global risk assets continued to rally in April. First quarter earnings are coming in better than expected, Central banks around the globe remain accommodative, economic data saw improvement, US & China trade negotiations appeared to...