Quarter End Bounce
U.S. equity futures are flat this Monday morning as the market looks to build on last week’s +6.4% rally in the S&P 500, which pulled it out of the bear’s paws, now down 18.4% from the peak. Equity markets rebounded last week, as a pullback in bond yields, inflation worries, and commodity and oil prices helped sentiment.
The year-to-date lagging sectors of consumer discretionary and technology posted gains over 7%. Ten-year Treasury yields fell to just above 3% at one-point last week, from 3.5% ten days ago. Consumer discretionary sector climbed 8.2%, and health care added 8.1%. Real estate was also strong, up 7.7%, followed by a 7.3% gain in technology, a 7.2% rise in utilities and a 7% climb in communication services. Energy, which slipped 1.6%, was the only sector down on the week. The market is starting to sense that near-term Fed tightening will relent in the second half of the year and lead to eventual easing as the economy weakens.
WTI finished the week at the $108 mark, down from north of $120 earlier in the month. Natural gas is down almost -40% Copper dropped -10% on the week and is over -25% off its 1q22 high. Cotton was “pants” dropping over -30% last week alone. Wheat and other grains have wilted almost -30% from their quarter’s highs.
Is Opportunity knocking for late 2022? Household balance sheets are in the best shape in over a decade. Our domestic banking system is rock solid. The U.S. economy has vastly outperformed most of the developed world the last 18 months. Most commodities are quickly dropping in price. Most of the rise in Treasury yields is likely behind us, as the U.S. economy is already cooling down. Interest rate hike expectations have been dropping since the Fed’s raised by 0.75% rate hike. So far, this looks to be the peak of the “yield panic” that hurt stocks in early June. Your highest returning incremental investments are almost always made during times of high volatility and uncertainty, not during boom times.
Weekly Stock Podcast: REITs-The Real deal about Real Estate Trusts
https://www.youtube.com/watch?v=8FGVqYv1RZc&list=PLxj0FBH5Bt8twiZx9RvxpW9AydohZ5W3-&index=35
News or Noise: Federal Reserve raises 75 basis points
https://www.youtube.com/watch?v=muctBT2Lsik&list=PLxj0FBH5Bt8vxmPI12L9xWcpoVMX7jqvZ&index=27
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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