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2022 - January Update
Happy New Year!! I know we’re almost a month in, but I’ll still say it! With everything we’ve been through over the last 2+ years, we all deserve “happy” anything, despite the dissenting curmudgeons like Larry David (see clip)
2022 is off to a rocky start, tech has had a selloff that now puts the NASDAQ in correction territory (down more than 10%), stocks are concerned about the economy’s ability to continue to grow, but also temper inflation. The Fed has indicated that rates will be increasing while simultaneously reducing their asset purchasing. We are in the thick of earnings season right now, and while earnings for last quarter have mostly beat expectations, the outlooks provided have not had the same growth trajectory. The upside is: concerns are around inflation, supply chains not meeting increased demand, and a hawkish Fed –are all by-products of a solid economy and recovery.
It is also important to remember that having pullbacks amid cycles is common and even necessary in healthy markets. The chart below shows all of the intra-year pullbacks since 1980 and then where that year finished. As noted, calendar years average a drop of 14% at some point in the year, and 32 of the last 42 years have ended positive.
Cash on the Sidelines
As I addressed in my 2022 Market Outlook video, consumers are very well positioned and in general financially strong. I recently came across this chart as well, showing households and checkable deposits. An increase of 188% just since the start of 2020 – what households do with these record levels of cash remains to be seen, but it may provide a significant tailwind to the economy and financial markets.
As always, please do not hesitate to reach out if you have any questions! Thank you for your trust and partnership.
Warmly,
Past performance is no guarantee of future results. Indexes cannot be invested into directly.
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