MFG May 2022 Comments
Situation:
- Ukraine/Russia War enters 3rd Month. Reuters April 23, 2022
- Inflation sets 40 year high of 8.4%. USA Today April 12, 2022
- US Federal Reserve begins swift increase in interest rates. CNBC.com May 4, 202
- 30 Year Home Mortgage Rates top 6%. Money Magazine April 13, 2022
- China economy slows dramatically. WSJ May 12, 2022
As a result:
So far this year we have seen a sharp decline is growth stocks around 20%-30%. Decline in Value stocks of about 10%-15%. Decline in bonds of about 10%-20%. Gold is flat. WSJ May 14, 2022
Questions:
Can the US Government afford 3% interest on $30 Trillion of Debt?
$1 Trillion of interest due as the US government collects $4 Trillion of taxes! This won’t go well.
Can US housing market absorb a 6% 30-year loan financing?
“The housing market is cooling very rapidly, and sales are set to fall by 20 to 30% by mid-year,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “The writing is on the wall, in big, sharp, clear letters.” Fortune March 25, 2022.
My Opinion:
‘Interest rates are set to DECLINE!’ Doug Cote, Voya CIO May 12,2022. Perhaps strong profits in bonds for investors. Long term bonds and preferred stocks best of class.
US Stocks set to lead market higher as sell off should create intermediate term buying opportunities! Value stocks seem poised to continue leadership.
Inflation falls from 8.4 to 4.1% by year end! UBS May 10, 2022
Nervous US Fed too aggressive with rate hikes, should subside.
Tech stocks lag, for now.
‘2023 year-end price target S&P 500 5,600’ (currently 3,900). Ned Davis Research March 25, 2022.
Perhaps better days arriving Summer 2022?
Famous investor Warren Buffet, ‘be nervous when others are greedy. Be greedy when others are nervous.’ It is how he became a billionaire.
Enjoy your Summer!
Disclosure: The information and opinions presented here are those of Wade McFee and are for general information only and are not intended to provide specific advice or recommendations for any individual. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors. You should contact your investment representative, attorney, accountant or tax advisor with regard to your individual situation
Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results
Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.
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