Berthel Insights 7-11-2022

July 11, 2022

Weekly Inspiration

“Patience is not the ability to wait, but to keep a good attitude while waiting.”

-Unknown-

Berthel Insights

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
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

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
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

Footnotes and Sources

^{1. The Wall Street Journal, July 8, 2022}

^{2. The Wall Street Journal, July 8, 2022}

^{3. The Wall Street Journal, July 8, 2022}

^{4. CNBC, July 8, 2022}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}