Sponsored Content - As we reached 2022’s halfway mark, we were told that we are now in a bear market; this, as measured by the S&P 500, the broadest major index, says Chris Temple, editor and publisher, National Investor Publishing.
That Index in the wake of the Fed’s latest interest rate hike was down 20% finally from its high; a mark long since reached by the Nasdaq, the Russell 2000 Small Cap Index, the resource-rich Toronto Venture Exchange, and last but not least, those Old FAANGs. As a group, the “Nifty Five” (Facebook, Apple, Amazon, Netflix and Google) were recently down more than TWICE the S&P 500’s decline.
Suggesting things for the markets and economy will get considerably worse before they get better, we have the chief cause of all this market misery: the newly dubbed (by yours truly) “Fire Marshall Jay.” (You’ll get the comparison if you, like me, were a fan of the old sketch comedy show In Living Color…and especially of one of Jim Carrey’s characters.) From clueless arsonist to now—if his rhetoric is to be even half believed—reckless fireman, Powell has been more plain spoken of late that NOTHING will be allowed to stand in the way of his bringing inflation back down.
Most recently as this is written, Powell reinforced in Europe what he told Congress days before in his semi-annual Congressional testimony: undoing his damage on the inflation front is JOB ONE. He is fine with a recession and a weaker job market in the months ahead if that’s what it takes to put out the fire.
So far, at least, the new cyclical bear market on Wall Street has generally not been accompanied by any systemic issues that caused markets to seize up and then crash back in 2008. But as the Fed’s nascent tightening/inflation fighting campaign moves along the odds increase that something will “break.” It will be interesting to see if we are able to make it to year-end before Powell & Company have pulled out one too many sticks in this latest game of Monetary Jenga.
We’re but days away from the bear market’s greatest reality check yet: subpar Q2 earnings and downgrades for the next couple quarters or more. The odds and deteriorating backdrop overall both point to a possibly significant new leg down for the broad markets before long. This should especially be the time, therefore, when you’re honing your shopping list of the many worthwhile babies that have been thrown out with all the bath water by investors.
Indeed, I am making the case to my members right now of a significant intermediate-term bottom for the broad stock market being reached prior to the mid-term elections in November. But for the best individual stories among all the wreckage especially, it’s not too early to be taking/adding to long-term positions.
(NOTE: For an expanded/more detailed look at Chris’ comments and recommendations, check out HIS FULL MID-YEAR REPORT.)
If you are not already a member, visit Chris Temple at NationalInvestor.com.