Good afternoon,

 

Just a quick note today, after a week away for me. The afternoon rain here in Prince George sure beats Calgary, which was a mess of greasy wet snow and flight delays on Friday.

 

After several rough days in equity markets, giving up a good chunk of the years’ sputtering gains, Elon Musk’s agreement on terms with the outgoing Twitter board breathed some enthusiasm back late in Monday trading. Markets are still collectively considering the realities of a more inflation-fighting rate hikes, the flow through of the Covid spending spree, and the uncertainties of tyrants running amok. All of which makes this first graph worth a look.

 

Context Matters: A list of market corrections on the S&P 500, and their subsequent returns are shown chart below from RBC Global Asset Management. We looked at the worst 15 quarters for U.S. equities over the past 20 years. Some of us have lived through a few of these, but may not readily recall how the market performed in periods following the drops.

 

In short, red eventually means things are on sale, and green tends to follow, as shown below

 

 

Weekly Wrap:

• Ongoing omicron: What’s next for China? – The omicron variant’s spread has been a heavy blow to the Chinese economy as local governments impose extremely rigid lockdowns. We examine the zero-COVID policy’s impact on the Chinese and global economies and assess how China’s central government may react.
• U.S. bond volatility high as Fed weighs tightening options – Treasury yields continue to rise as more Fed officials seem amenable to a faster rate hike cycle. The moves have helped the U.S. dollar outperform its peers, and we look at the prospects for the Fed’s tightening to pull in overseas bond investors.
• Regional highlights: Inflation remains key focus for Canadian households; Markets expect second Macron term; Weak stimulus in China disappoints investors.

More here: Global Insight Weekly

 

Turning off: Nexflix advised that it may have a significant drop in its subscriber growth rate upcoming. The streaming giant expects 8.5 million new subscribers in 2022, compared to nearly 28 million in 2021. Shares dropped about 1/3 as investors digested the less promising prospects.

 

 

Enjoy the week!

 

Mark