Morning Note: Is there too much "Drama" in the market? 5/6/2022 5:00 AM

This week has seen the market jump all over the scale, with the dramatic run-up on Wednesday and the bottom falling out on Thursday. 

We are hearing a lot about hitting lows not seen since June of 2020, but looking at some sectors going back to Jan of 2022, we are not in such bad shape, and in some cases, we are higher. 

The Federal Reserve Chairman gave the market its expected 50 basis point increase, pointing to at least two more 50 basis point increases in the future. So I believe we will see a 50 basis point increase in June and July, which would increase rates by 1.50 basis points in 90 days. 

A term is being used daily by market analysts, "if you have the time horizon, some of the pullbacks could be a buying opportunity." Before I go down that path, I would recommend any investor speak to their advisor or dig deep into their research before buying or selling.

Through experience and the market's history, we have seen some sectors weather the storm better, and now is no different. Even at this point, some sectors are doing well. The materials sector and some technology and energy sectors have provided a shelter for investors.

The "sustainability portfolio" that we recommended back on December 17th for 2022 has held its own as it has embraced some of these sectors. 

When we reviewed all the sectors for 2022, we considered high inflation, higher energy prices, and a correction in the first half. However, as the market struggled, we did see a low in the overall market going into January 28th, 2022. I believe it created an additional buying opportunity for quality names, and we also added to the "sustainability portfolio we created."

While January 1st through May 6th has been a roller coaster ride, something interesting has occurred for some sectors. The indexes are down for 2022, but there have been many ups days; it has not been all down. Even with the big run-up and decline this week, the market was still up for the week.  

The job report comes out at 8:30 AM today; it will help shape how we close the week. For example, if the number comes in weak, it could mean that employers need to continue to raise wages to attract employees, which is an additional sign of out-of-control inflation. 

On the other hand, if the number is in-line or strong, it could signify that inflation is possibly peaking, and the Federal Reserve won't have to be as aggressive as something. 

Investors should never bury their heads in the sand during these times or throw their hands up in the air and say, I give. 

If you have the time horizon, focus on your goals, understand what is positioned to do well regardless of the daily gyrations, and ask yourself will specific sectors and investments be higher a year from today?

Remember discipline, focus, and research will reward investors in the long run.  

I am about 43 days away from releasing our second-half outlook for 2022. An early preview of the report sees a ten-year Treasury bond trading at 3.65% to 4% by year-end.  

I look forward to speaking to everyone over the next 60 days. 

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