Markets Mixed Last Week, Ending Worst Quarter Since Pandemic

The US markets ended mixed last week, with the Dow (-0.1%), NASDAQ (+0.7%), and S&P 500 (+0.1%).  This also marked the end of the first quarter, as markets demonstrated their worst performance since the onset of the pandemic in 2020, ending the quarter down roughly 5%.  Meanwhile, taxable bonds edged up about 0.5% and tax-free municipal bonds were relatively flat.

The Russia-Ukraine war continues to remain in the headlines, but much less of a shock factor anymore.  The overall impact to the global economy is not large, except for the spike in energy prices, particularly in Europe, who relies heavily on Russian oil and gas.  Hiding behind those headlines was a mixed bag of economic data.  US manufacturing data reached a 6-month high, but China’s manufacturing data hit a pandemic low, as China is experiencing a new round of COVID shutdowns.  The US also posted that the ISM index of new orders declined significantly since February, and this represents a leading economic indicator.  Separately, we experienced a yield curve inversion, as the yield on the 2-year Treasury bond exceeded that of the 10-year bond, which has historically been seen as a leading indicator of slowing growth, possibly a recessionary signal.

I taped this week’s TV episode last Friday when I interviewed Herb Morgan, Chief Investment Officer of Efficient Market Advisors.  Herb is very encouraged by economic conditions, and does not feel that the Fed’s intent for raising interest rates will be enough to cause a US recession.  Herb also noted that companies have been raising their earning estimates, which is also very optimistic, as we will begin earnings season next week.  I encourage you to view this episode on my website, social media, Youtube (released on Wednesday), or RVN-TV streaming tonight at 6:00 pm EST.

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