Weekly Market Impact

Undoubtedly, investors face a remarkably complex economic environment intensified by historically dismal market performance – four-decade high inflation, the 10-year Treasury yield rapidly climbing to levels not seen since 2011 (3.36% at close), the S&P 500 down more than 20% on the year, and perhaps most importantly, balanced account drawdowns averaging 16-17% year to date. The stress pervading markets saw little reprieve from the May CPI print which showed accelerating inflation rather than confirming a peak in prices that market participants had hoped for. On this episode, Phil breaks down the various inflation measures, explaining how core metrics can foreshadow further rising prices, but headline categories, if not contained, have the potential to damage economic growth going forward. Energy prices, particularly gasoline, are the key, and a decline in the cost of fossil fuels and related products either through naturally waning or actively suppressed demand appears requisite for prices to fall. Listen in to hear why Phil sees a strong American consumer with rising wages and low unemployment will avoid a deep recession if the economy gets there at all.

This week Phil speaks with Ladenburg Asset Management Analyst, Mike Meechan, as the two discuss Stagflation and the current market environment. From the definitional sense, one may argue that we are currently experiencing stagflation as we saw negative GDP growth in the first quarter, while inflation is hovering near its highest levels in 40 years. However, Phil and Mike contend that when digging deeper into the data, stagflation does not appear to be something investors should be worried about. The two wrap up their conversation by discussing current portfolio positioning for a continued rising rate environment.

On today’s Episode, Phil discusses if the recent market movement is a Bull trap or a legit Turnaround. Equity markets closed before the holiday weekend with one of their best weeks since November of 2020. The question now begs, is this a classic bull trap as equities have been pummeled with almost half the year behind us now? Phil discusses one of the most important reasons supporting a legit turnaround; a strong labor market. Lower income workers are able to switch jobs and earn higher salaries. We are still not out of the woods yet as much more action of the Fed is on the horizon. However, it would be a welcome sign to see some momentum build in the following weeks as summer approaches.

Finally, some positive momentum in markets on this last Monday in May! Hopefully, that can continue, although the occasional rallies that have popped up this year were all eventually overwhelmed by the broader downtrend across financial markets. This past Friday (5/20), the S&P 500 fluctuated on the fringe of bear market territory; worries over a significant downturn proliferated and investors piled into bonds on growing growth concerns. This week, Phil takes a moment to remind listeners that market corrections are normal. The process by which markets return to normal, however, (a theme Ladenburg expected from markets this year) has been quite volatile, even painful for those market participants heavily allocated to tech and growth. Despite the inflation/interest rate cloud hovering overhead, the underlying economy is much stronger than the rout in risk assets would suggest. Tune in to how active management can help through this summer’s volatility and why Phil does not expect a recession in the near-term.

Despite significant market declines eroding portfolio values seemingly regardless of allocation (stocks, bonds, and even crypto are all simultaneously at or near bear market territory), this week, Phil attempts to calm investors – particularly those heading for the exit. The last decade or more has been one heck of a run, but the exceptionally easy financial conditions and historically low interest rates that helped fuel the longest bull market in history are now a thing of the past. In the 91 trading days since marking an all-time high, the S&P 500 has collapsed 15.7%, inflation hit 40-year highs, and the Fed raised interest rates 75 basis points… how can investors withstand this type of environment? Phil provides a few simple suggestions, but importantly points out that due to the rate reset dramatically repricing stocks across major indices, much of the market is beginning to look attractive on a valuation basis. 12-month forward PE ratios have declined below historical averages, and even the yield curve appears fairly valued. Of course, China’s struggle with Covid amidst slowing growth, potential recession in Europe, and stubbornly high inflation all loom in the macro background. Can companies earn their way to better stock performance? Can the consumer outspend the rate of inflation? Listen in to find out.

Once again, Phil runs down another week of poor performance across markets. Stocks were walloped, but bond yields creeped down a bit with the 10-year approaching 3%, and signs of a potential stabilization in municipal markets look good. Unfortunately, it’s been rough going, we’re in a classic market correction… it happens. But don’t panic! Our latest white paper points out the bull case for equities, and here, Phil explains why strong job increases (regaining 95% of those lost due to Covid) and higher wages suggest we are darn close to healing from the pandemic. While he’s keeping an eye on a few concerning macroeconomic risks – supply chain worries in China stemming from its Zero-Covid policy, fears of recession in Europe, and stubborn inflation at home –  Phil encourages investors that this is the opportunity to buy stock, rebalance your portfolio, and take advantage of this correction because markets tend to perform very well on the other side.

In this Special Edition Podcast, Phil digs into the recent Fed policy statement, analyzing the mixed market response to Chairman Powell’s comment taking 75 bps hikes off the table. After noting major stock indices once again entered correction territory while the Vix approached bear market levels, Phil points out how volatility can be a friend to investors and even invites an opportunity to be more active or aggressive with portfolio allocations.

Today Phil is joined by Ben Dennis, an Investment Associate at Ladenburg Asset Management, to discuss the team’s recently published white paper, “An Update on Inflation.” The two delve into the historic nature of four-decade high inflation acceleration, interest rates and Fed outlook for the upcoming meeting and remainder of 2022, as well as portfolio positioning in this difficult market environment. Phil goes on to discuss key housing data released last week, market sentiment, and the importance of staying invested through downturns.

Today Phil takes a look back at a particularly difficult first quarter, noting the pain felt across markets and asset classes has left investors with nowhere to hide as both stocks and bonds were down significantly through the period. He then goes on to a brief update on Coronavirus covering increasing case counts in the Northeast and reinstated mandates in certain jurisdictions, though importantly continuing low fatality rates. After putting inflation in context historically and  relaying the importance of the housing market and the effect rising mortgage rates could have on aggregate demand and subsequently rising prices, Phil wraps things up by examining the prospect of the Fed engineering a soft landing: will it be different this time around? Is the return to normal for real? And could that mean a potential stock market rally on the back half of the year?