“Patience is not the ability to wait, but to keep a good attitude while waiting.”
Patience, and taking the long view have always been pretty common conversation topics between advisors and clients. And given the volatility of the past several months (years??) they are topics worthy of discussion. Market highs and lows, inflation, gas prices and a general pessimism that just won’t shake loose, all contribute to make patience difficult to maintain.
But we’ve seen this before…bear and bull markets come and go in cycles. And though not technically signifying a bear market, a decline of 15% in the market typically requires 800 to 850 days to recover completely or 2 to 2.5 years. That’s not hard and fast, and that recovery is never in a straight line, but giving your clients a number with which to think about the market may help them to remain patient and maintain a good attitude! The long term means different things to different observers…helping to quantify what it may mean to the market in general, can help to calm nerves and allow for clearer thinking.
However, staying the course and remaining patient does not mean becoming sedentary. As a pilot navigates turbulence, no news from the cockpit and no plan of action is not welcomed by the passengers. We want the pilot to acknowledge the turbulence and assure us that she is taking the appropriate information in and considering all her options to deal with the bumpy ride. Be active and engaged. Don’t confuse patience with being immobile. The key is to be both patient and engaged. Your clients will appreciate your active approach to patience.
In a holiday-shortened trading week, stocks rallied despite mixed economic data and vacillating energy prices and bond yields.
The Dow Jones Industrial Average increased 0.77%, while the Standard & Poor’s 500 rose 1.94%. The Nasdaq Composite index picked up 4.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.46% higher.1,2,3
Stocks Move Higher
In advance of Friday’s much-anticipated employment report, stocks enjoyed successive daily gains despite ongoing concerns about a recession. Recession fears were supported by an inversion in the yield curve and updated second-quarter Gross Domestic Product projections indicating the economy is ready to contract.
Technology shares were the week’s big winners as investors appear to have turned to companies with earnings growth potential during a weakening economic environment. Stocks bounced along the flatline following the strong jobs report on Friday to close out a positive week.
Employment’s Mixed Signal
One of the holes in the "imminent-recession" narrative has been the labor market's strength. Historically, recessions have been preceded by or concurrently with a weakening jobs market.
Friday's employment report reflected a job market that continues to belie Wall Street's recession fears. Employers added 372,000 jobs in June, a number that was above economists' estimates of 250,000. Wage gains were robust (+5.1% year-over-year), though still below the inflation rate. The unemployment rate was unchanged at 3.6%.4
This Week: Key Economic Data
Wednesday: Consumer Price Index (CPI).
Thursday: Producer Price Index (PPI). Jobless Claims.
Friday: Retail Sales. Industrial Production. Consumer Sentiment.
Source: Econoday, July 8, 2022
This Week: Companies Reporting Earnings
Wednesday: Delta Air Lines, Inc. (DAL).
Thursday: JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Conagra Brands (CAG).
Friday: UnitedHealth Group (UNH), Citigroup, Inc. (C), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK), U.S. Bancorp (USB), The PNC Financial Services Group, Inc. (PNC).
Source: Zacks, July 8, 2022
Footnotes and Sources
2. The Wall Street Journal, July 8, 2022
3. The Wall Street Journal, July 8, 2022
4. CNBC, July 8, 2022
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Berthel Insights 7-11-2022
July 11, 2022