Market Recap and the Week Ahead | Recession

“A goal without a plan is just a wish.” - Antoine de Saint-Exupéry

Last week's market recap:

The S&P 500 was up 4.28% for the week, and was up 8.2% for month. Year-to-date the index is down -12.58%.
Large-Cap Value leads performance YTD at -7.10%
NASDAQ closed the week up 4.72% and is down -20.45% YTD.
10-Year Treasury Rate decreased, ending the week at 2.62% from 2.75% the prior week.
The 1-Year Treasury is yielding 2.96%
Fed Funds Target rate is 2.50%

The week ahead, 8/1:

July Jobs Report
July PMIs
OPEC+ meeting
Corporate Earnings Continues… (All industries, but major oil companies will be in focus)

Quick Comments and Definition of Recession:

The market was up 8+% in July. Many feel inflation has peaked and for Investors this is a reminder… “Recession” is not always a bad word. 1) In the current environment, jobs are plentiful, and Recession probably means inflation is coming down. 2) The stock market is forward looking, and the sooner we’re in a recession, should mean the sooner we’re out of a recession. Which means the sooner we enter the expansion phase.

There are different definitions of recession. Most say, it’s two consecutive quarters of negative GDP. However, the official definition isn’t based on quantitative rules. It is determined by the National Bureau of Economic Research (NBER), a nonprofit committee made up of economists. So the official definition is really just whenever these guys decide to announce that we’re in a recession and they usually make the announcement after the fact.

The silver lining around the recent slowdown is it looks like the Fed’s rate hikes are working, and that should alleviate inflationary pressures. However, if equities go up too much, too fast, that will be inflationary. Then the Fed would probably need to raise rates higher than currently expected, which could put pressure on stocks. So we aren’t out of the woods yet, but the current environment looks much better than it did in mid-June.

To discuss in more detail, feel free to reach out to us.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP®

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