The market has tumbled over the past couple weeks. Here’s what I’m telling my clients:
As of mid-April, the stock market was gaining ground, especially Small/Mid Caps. But on the 19th, FED chairman Jay Powell stated the obvious, that FED fund rates would need to accelerate. Since then, the stock market has been in a severe decline, but I think it’s unwarranted. FED rates are already drastically behind market rates…a move in FED rates won’t necessarily drive Bond & Mortgage rates higher, the FED is just catching up to what the market has already priced in.
Additionally, the USA economy has mostly recovered from the COVID hangover, but Semiconductor Chips are still in short supply. Global economic headwinds that are emanating from the Ukraine invasion are impacting three sectors: Agriculture, Energy & Defense. Despite the negative headlines, I cynically believe the USA is strategically poised to economically take advantage of this global crisis. The USA dominates the global economy in Agriculture, Energy, Defense & Chips, these sectors are among our largest exports. The Ukraine crisis could be extremely profitable for the USA economy.
It’s lonely being an optimist in a down market, but there are a few others. It was recently announced that Warren Buffett’s stock purchases during the first quarter were his largest since 2008. Perhaps things aren’t as bleak as they’re being reported.
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