After the steep March 2020 market correction, the turnaround blew past previous highs and then kept going, fueled as much by stimuli as expected future earnings -- which felt pretty dang good. But if you’re like me, it was hard to completely stifle the Depression-era granny living in your head. Occasionally my brain-Granny would look quizzically, and then wipe her glasses on one of the tissues she kept up her sleeve, (the one she licked and wiped my face with when I was a kid). With glasses defogged, she’d declare: “Well now sonny, those returns aint gonna last as long as a good pair of britches from the Sears catalogue, are they!” Markets occasionally take back some of their short-term exuberance.
This will sound odd, but graphs should make sense with your glasses off. As a tool to inform strategy, they’re about trends – and might be most useful when measured in handfuls of years, as opposed to days or weeks. With glasses-on, short-term-focused results might tempt me to forget I’m taking a longer view. Broadly, the bumps on the graph look a lot like the previous bumps on the graph. (There’s actually an entire industry studying these bumps -- a sort of psychological meta-mood-analysis). This isn’t to say current affairs aren’t their own set of entirely unique and legitimate worries. They most certainly are. But we’re a resilient species. Read on.
Monthly highlights Full report here: Global Insight or segmented below
| A different kind of inflationary environment As the impacts of the global pandemic continue to reverberate and geopolitical tensions erupt in the heart of Europe, global economies are facing unprecedented inflation pressure. We get the thoughts of Eric Lascelles, chief economist for RBC Global Asset Management, on how we got here as well as what investors could expect from the second half of the year and beyond. PDF link | Is energy security siphoning power from the green energy transition? Russia’s predatory move on Ukraine is pitting energy security against energy transition. Many governments are shifting energy policies in favor of fossil fuels in the short term, raising fears the energy transition may end up on the back burner. We explore this friction and its impact for investors. PDF link | Global equity: Running the gauntlet It’s been a bruising year so far for global equity markets, with challenges and risks arising from seemingly all directions. It could take time to work through the uncertainties. We continue to believe the S&P 500 has the potential to be higher than current levels in the next 12 months. PDF link Weekly Detail: Weekly or highlights below - A change of pace, in more ways than one – This week’s Federal Reserve meeting was followed by a somewhat surprising press conference from Chair Jerome Powell, at which he appeared to push back against the market’s aggressive rate hike expectations. Inflation, it turns out, may not be the only thing on central bankers’ minds.
- What have we learned with U.S. earnings season coming to a close? – With over 83% of companies in the S&P 500 having already reported earnings, we take a look at how the S&P 500 and each of the different sectors have fared, relative to expectations, thus far.
- Regional highlights: Shifting sentiment towards Canadian banks; Europe proposes ban of Russian oil, Bank of England’s dovish hike; China strives to fight COVID-19 and stabilize economic growth.
A Couple of Charts on Bear Markets (actually they’re spreadsheets, so keep your glasses on): S&P 500 returns after bad starts to the year: 2022 has been one of the worst starts ever for the S&P 500, ranking as the third worst start to a year since 1928. “But looking at the 10 worst starts ever shows that stocks tend to bounce back ...” 
S&P 500 corrections since 1946: “The S&P 500 peaked on January 2 and so far the low during the correction was on April 29, for a 13.9% correction. Given the current correction is 13.9% and has lasted 117 days already, we are getting into the range where previous corrections indeed hit bottom.” Of course past results don’t guarantee anything, but they’re not uninformative either. 
The Grandparents in my Head: Assuming I’m suitably invested for a longer period than corrections tend to last, I can imagine myself explaining decades of results to my Depression-era grandma, or maybe my 3rd great-grandpa, a starving Irish tenant farmer, with just a very few words: “It got better...” Mark | | |
