Good afternoon,

 

North American markets eked out a tiny gain last Friday, finishing the week like a dog poking his snout on the kitchen table at dinnertime, then took a sniff at improvement Monday, only to slunk away Tuesday on negative earnings news.

 

The S&P 500:

After several months of optimistic gains, US markets are getting cheaper, settling down below normal price-earnings ratios. Concerns surrounding inflation, Fed rate policy and recession risks have led the S&P 500 to fall some 20% below its January peak. By Friday the S&P 500 was trading at 16.5 times estimated 12-month earnings, which according to Bloomberg, is the lowest level since April of 2020 and below the average level of 17.04 times seen over the last decade (chart below).

 

 

Regarding Inflation:

In the linked audio snippet, Listen Here a couple of our chief strategists go through the salient issues in some detail. It might be worth the roughly 24-minute listen -- Jim Allworth usually makes a lot of sense. He and fellow strategist Mark Bayko review their take on inflation, its impact on the broader economy and markets, and also give us update on our recession scorecard (spoiler… the risk is not zero, but not as bad as some would suggest). They also discuss the fixed income segment of portfolios in the wake of higher bond yields.

 

Enjoy your week!

 

Mark