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Cacic Wealth Management

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Milan Cacic

June 30, 2022

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SIX MONTHS DOWN SIX TO GO...

The first six months of the market’s performance in 2022 can only be described as disappointing. Between January 1 and June 30, the S&P 500 was down approximately 24%. This is the worst 6 month start of the year since 1970. It is also the eighth 20% or more decline since 1990. It should also be noted that the S&P 500, with eight 20% or more declines since 1990 has still returned an average of 9.8%.

 

It is likely we will see what they call is a “bear market bounce”. This usually occurs when sentiment is at its worst and a large majority of stocks are trading below their 50-day moving average. Investor sentiment is currently at the lowest level since it's been tracked and the percentage of companies trading above their 50-day moving average hit a low of 1.9% last week. Chart below

 

 

Unfortunately, bear market bounces are exactly what the name says. They are bounces and are not long-term sustainable recoveries. In order for us to see a long-term sustained recovery, one of two things needs to happen: either (1) the Federal Reserve has to lower its interest rate hike expectations, which would happen once inflation starts to come down, or (2) earnings expectation for companies start to increase. At this point, neither of these conditions are being met. Hopefully we will get a better inflation number in July.

I have also included a link to a presentation from Benjamin Tal, Deputy Chief Economist of CIBC World Markets Inc. entitled “Alberta Economic Update”:

CLICK HERE

 

As always if you have any questions, please feel free to give us a call anytime.

 

I hope everybody has a great long weekend.

 

Milan

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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


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