Nick Pirsos, Wealth Advisor at MRA Advisory Group, discusses how global markets continue to whipsaw. Below is Nick’s May recap. Nick offers a complimentary first meeting (via the link below), learn more about Nick and schedule your complimentary meeting today for assistance in positioning your portfolio for the fast changing business climate.
The US 1Q22 GDP growth rate declined 1.5%, its first negative reading since 2Q20, and was
worse than the initial estimate reported last month of 1.4%. Using the simplistic, albeit
inaccurate, definition of a recession (two consecutive quarterly declines), suggests we could be
about two months away from declaring the first US recession since the unexpected Covid-driven
events in 2020 and the previous 2008-09 Financial Crisis. [Note: the formal definition of a
recession is determined by the National Bureau of Economic Research which looks for “a
significant decline in economic activity spread across the economy and which lasts for more than
a few months”.]
US Corporate earnings however continue their steady climb, up about 4.5% in 1Q22,
outperforming most beginning year forecasts.
And the outperformance has been widespread with 79% of the S&P500 companies posting better
than expected results.
Interestingly, the worst performing sectors, from an EPS growth expectations perspective
(Energy & Utilities), have been among the leading stock performing sectors YTD.
The key driver for the near bear market YTD equity returns has been weakening investor
sentiment. This is best depicted by the black line in the earlier graph. Investor concerns over
inflation, Russia-Ukraine developments and slowing global GDP growth has resulted in a near
25% reduction in P/E multiples and a shift from growth to defensive sectors across global
markets. The month of May (thru last Friday the 27th) has seen a somewhat of a stabilization of
returns with non-US sectors outperforming the US, underscoring current investor preference for
value overgrowth.
What should you do with your portfolio with all this mixed signaling?
Clearly, a large degree of fundamental and valuation change has taken place in the market in
2022 and portfolios should be re-aligned, accordingly. Mis-positioned portfolios at the beginning
of the year are down significantly and should not simply be hoping for a bounce back. As the old
axiom notes, “hope is not a strategy”.
Next month we will update our market outlook for the 2H22. Will Fed Chairman Powell achieve
the elusive economic soft landing or is more air turbulence in the offing?
Or is it quite possible the US recession has already started, and we should be looking for its
endpoint?
In the meantime, reach out to us if you would like to discuss in greater detail:
- Our forward twelve-month Equity Market Outlook.
- Strategies to mitigate monthly equity volatility.
- Identifying your portfolio’s current expected risk/opportunity level.
- Optimizing your portfolio’s performance.
- Capital gains tax positioning.
- Or any other personal Financial Planning and Retirement Savings needs including
- Insurance (Life, Disability, Group Health), College Planning/529 Plans, Wills and Estate planning.
- Small Business owners, we can help you with employee retention creating low-cost 401Kand Pension Plans and Group Medical Health Insurance.
Feel free to share our views with family or friends who are also confronted with these important
Wealth Planning decisions.
We offer a broad spectrum of low-cost, custom-tailored, subscription services.
If you need further guidance in reviewing and optimizing your investment and retirement
portfolio, MRA Advisory Group and I are ready to discuss all your investment concerns to best
position your Retirement Goals.
To get started with Nick, click the link below. Your answers and solutions are one click away! https://mraadvisory.com/nickpirsos/