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 Investment Review/Outlook  Market Highlights Current Investment Outlook Stock Highlights
Investment Review/Outlook

Market Highlights

Economic

  • June consumer confidence fell to 98.7, as inflation hit a 40-year high of 9.1%
  • Retail sales rose 1.0% in June, with auto sales down to 13 million units, below estimates
  • Non-farm payrolls in June increased to 372,000, above estimates of 265,000
  • Unemployment held at 3.6%, with underemployment falling to 6.7%
  • U.S. industrial production fell -0.2%, following a rise of 0.2% in May
  • Housing prices fell -14% on a year-over-year basis, with an increase in supply
  • New home construction numbers were 1.54 million in May, below estimates
  • Existing home sales were down at 5.4 million in , as mortgage rate rose over 6%
  • U.S. manufacturing expansion is slowing, with June ISM at 53, below estimates
  • Personal income was up 0.5% and consumer spending was down 0.2% in May
  • GDP was down -1.6% in the first quarter, and second quarter estimates are -2.1%

Inflation

  • June core inflation was 9.1% for CPI and 11.3% for PPI on a year-over-year basis
  • Crude oil rose to $123 and has settled back to $95 as the war in Ukraine enters its third month
  • Inflation is moving higher with increases in wages, rents, foods, and goods

Monetary Policy

  • The Fed increased the Fed Funds rate to 1.58% and the Discount rate to 1.75%
  • The Fed may raise rates by 75 basis points at the July meeting and 25 basis points in September
  • The Fed will continue to raise rates and reduce its balance sheet to tame inflation

International

  • The war in Ukraine continues as Congress sends more weapons
  • Finland and Sweden are ready to join NATO after Russia's invasion
  • China has more lock-downs as COVID variant spreads
  • The global recession has begun as copper and other commodities roll over

Interest Rates

  • Ten-year Treasury yields rose from 2.35% to 3.47% and now stand at 2.99%
  • Libor, the inter-bank lending standard, is 2.73%, and is set to be phased out later this year
  • Mortgage rates rose, as the 30-year fixed rate increased to 6.03%
  • Yields on international debt have turned positive as rates and inflation rise

Earnings

  • Corporate earnings still beating estimates 68% of the time and revenues beating 65%
  • 2022 earnings are projected to grow 4%, down from 9%, as earnings have been revised
  • Earnings have decelerated as Foreign exchange rates and higher interest rates take hold

Market Outlook

  • S&P 500 was down -20% for the 2022 as tech-heavy Nasdaq market was down -29%
  • Market volatility increased as the Fed tries to regain credibility
  • Consumer Staples, Utilities, and Energy were the best performing groups
  • The S&P 500 is trading at 15.9 times forward earnings, above its 25-year average

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