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Recap | Week Ahead | Reasons to be Bullish Thumbnail

Recap | Week Ahead | Reasons to be Bullish

“The true investor welcomes volatility… a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses,” – Warren Buffet 

Last week's market recap:  

  • The S&P 500 closed the week down -2.10%. Year-to-date the index is down -6.68%
  • NASDAQ closed the week down -3.22%. YTD the index is down -9.73%
  • U.S. Aggregate Bond index closed the week down -.12%. YTD the index is down -.79%
  • 10-Year Treasury Rate increased, ending the week at 4.44% up from 4.39% the prior week
    • Fed Funds Target rate remains at 3.50-3.75% 
  • The 1-Year Treasury is yielding 3.72%  
  • A 6 Month Treasury is yielding 3.73%  

 

The week ahead:  

  • Unemployment Rate
  • Retail Sales
  • Trade Balance
  • U.S.-Iran Conflict
  • Corporate Earnings:  Nike, Conagra, Tilray and many more   

 

Quick Comments:  

Geopolitics and energy are driving global markets. 

The S&P 500 fell for the 5th straight week, the first time since 2022. 

Inflation pressures are growing in-turn delaying Fed interest rates cuts.

We could potentially see ground troops in Iran.  

We’re not dismissing the negative news and headlines.  It’s real and concerning; however, there are still many reasons to remain bullish.

For long term investors, the recent market volatility creates opportunities to lock in higher bond yields and take advantage of cheaper equity valuations. 


  • Last year’s sell-off faded quickly. Investors would be wise to use recent dislocations to position for long after the Iran conflict. 
  • Consumer confidence is low, which usually mean forward returns are better.

 Source: JP Morgan Guide to the Markets


  • Intra-year declines greater than -10% are normal:


 Source: JP Morgan Guide to the Markets


 Earnings drive stocks over the long term.  We continue to see earnings grow.


Contrary to what you may feel or hear, personal balance sheets remain strong:


The chart below shows investors are buying insurance (puts) and they are paying high prices for it.  This usually means most of the bad news is priced into the markets and were setting a floor for the next leg higher.


Uncertainty is never comfortable, but long-term investors should use volatility to rebalance, add quality, and strengthen diversification.


As always, let us know if you have any questions.


Best,

CRA Investment Committee


Matt Reynolds CPA, CFP®

Tom Reynolds, CPA 

Robert T. Martin, CFA, CFP®

Joe McCaffrey, CFP® 

Gordon Shearer Jr., CFP® 

Jeff Hilliard, CFP®, CRPC®

Phillip Tompkins, CFP®


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