April Showers – Nowhere to Hide

Equity markets sold off late in the week in a linear manner closing the week, month, and year to Date on their lows.  China lockdowns, a late in the week piece of wage inflation, and a couple of mega-cap tech stock causing summer slowdown estimate cuts were the main culprits. These all point to slowing and stalling summer growth.

Equity indexes sold off between -2.5% for the Dow Industrials and -3.9% for the NASDAQ.  The S&P500 is down about -13% and the NASDAQ over -20% year to date. Only energy (+36%), commodities, staples (+1.5%), and utilities (+.3%) have positive year to date returns.  Being diversified is helping equity portfolios, but unlike TV talk, there is usually nowhere to “hide” during true market corrections.  The notion that “there is always a bull market somewhere” is hedge fund talk.

China markets are closed this week, but other markets in Asia traded lower this morning, including the Nikkei/Japan (-0.1%) and the KOSPI/Korea (-0.3%). In Europe, the U.K. is closed today, but the rest of the region is down, including the CAC 40/France (-1.3%), the FTSE MIB (-0.8%), and the DAX/Germany (-0.6%).

Much has been made those predicting the “demise of the dollar” for over a decade.  2022 has proven that call fictitious, if not at least horribly early. The USD index is stronger again this morning, with most currencies weakening against the US Dollar.  Thank the Federal Reserve for its hawkish interest rate talk if you travel overseas this summer.   The greatest currency weakness has come in 1- emerging market currencies (no surprise) and 2- the Japanese Yen weakening against the dollar as their central bank remains steadfast against raising short term interest rates there.

Europe is slowing on the back of lower consumer confidence due to 1- the Ukraine/Russia war and 2- more China shutdowns. Consumer confidence overseas was down 0.4 ppts to -22.0, the lowest since April 2020.  Time for a trip to Europe to spend some US$.

While emotions and returns the last 12 months might drive one to give up on “growth stocks”, we believe in running diversified portfolios with a combination of growth stocks, dividend payers, and dividend growers. An examination of forward NASDAQ returns after the worst months shows that the forward outlook has been quite impressive after declines like first quarter 2022 and April in growth and technology stocks.

 

Stock talk Podcast- Will there be a Second Quarter rally?

https://www.youtube.com/watch?v=TJ-Grawd4uU

Weekly Stock Talk Podcast: First Quarter 2022 Review

https://www.youtube.com/watch?v=_xQyGKqdd54&list=PLxj0FBH5Bt8twiZx9RvxpW9AydohZ5W3-&index=25

New or Noise: Economic Growth has Peaked-The Bond Market and Yield Curve

https://www.youtube.com/watch?v=EYYsas-FzDI

 

Oak Harvest YouTube Channel

https://www.youtube.com/channel/UCkLvOm9F5iC01-hHxRmUXpQ

Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):

https://oakharvestfg.com/stock-talk-podcast/

The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):

https://oakharvestfg.com/investor-mindset/

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