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

Market Highlights

Economic

  • March consumer confidence fell to 107.2, as inflation and a rising rate environment hit Economy
  • Retail sales rose 0.2% in March, with auto sales down to 13.4 million units, below estimates
  • Non-farm payrolls in March decreased to 431,000, below estimates of 490,000
  • Unemployment fell to 3.6%, with underemployment falling to 6.9%
  • U.S. industrial production rose 0.9%, following a rise of 0.5% in February
  • Housing prices rose 15% on a year-over-year basis, with an increase in supply to 6.4 months
  • New home construction numbers were 1.79 million in March, up slightly
  • Existing home sales were down at 5.7 million in March, as mortgage rate rose over 5%
  • U.S. manufacturing expansion is slowing, with March ISM at 57.1, below estimates
  • Personal income was up 0.5% and consumer spending was down 0.2% in February
  • GDP was up 5.7% in 2021, with strong demand, and should grow 2% 2022

Inflation

  • March core inflation was 8.5% for CPI and 11.2% for PPI on a year-over-year basis
  • Crude oil rose to $123 and has settled back to $99 as the war in Ukraine enters its 3rd month
  • Inflation is moving higher with increases in wages, rents, foods, and goods

Monetary Policy

  • The Fed increased the Fed Funds rate to 0.25% and the Discount rate to 0.5%
  • The Fed may raise rates by 50 basis points at the May and June meetings
  • The Fed may raise rates at least 5 to 8 times to tame inflation and reduce liquidity

International

  • Putin invades Ukraine at a heavy price and a big miscalculation
  • Finland and Sweden are ready to join NATO after Russia's invasion
  • China has more lock downs as COVID variant spreads
  • The war may cause a huge jump in wheat prices across the globe

Interest Rates

  • Ten-year Treasury yields rose from 1.77% to 2.93% and now stand at 2.8%
  • Libor, the inter-bank lending standard, is 1.21%, and is set to be phased out later this year
  • Mortgage rates rose, as the 30-year fixed rate increased to 5.2%
  • Yields on international debt have turned positive as rates and inflation rise

Earnings

  • Reported corporate earnings are beating estimates 79% of the time and revenues are beating 69%
  • 2022 earnings are projected to grow 9% as travel comes back with COVID receding
  • Markets may slow as Fed tries to slow inflation with a soft landing

Market Outlook

  • S&P 500 was down -4.6% for the first quarter as tech heavy Nasdaq hit bear market -20%
  • Market volatility increased as the Fed tries to regain credibility
  • Energy, Utilities, and Consumer Staples were the best performing groups
  • The S&P 500 is trading at 19.5 times forward earnings, above its 25-year average

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