Second Quarter Stock Market Recap 2022

Hello to our wonderful clients,

I'd like to start by wishing everyone a very Happy 4th of July weekend! Enjoy and stay safe.

So, staying with the weekend fireworks theme, all markets have seen plenty of fireworks this year.

Stock and Bond markets are down more than double digits this year. In fact, this is the worst performance, first half start to the year since 1970. 52 years! Wow

There are signs that we may be entering a slowdown, recession sometime over the next year. I'd like to talk about some of our holdings in our portfolios.

1. Municipal, Government and International Bonds are all down more than double digits with Government Bonds having the worst six month start to the year ever on record. These securities have been hit hard this year in this complete liquidity crunch on Wall Street. If we look at the cup half full, we need to be mindful that we are receiving dividends each month, in many accounts being re-invested and buying more shares each month. This is similar to the MLP oil space we owned for several years. We were down on that position for a long time, over several years. But we kept stressing that we were re-investing dividends each month at much lower prices and the benefit of that when share prices started to rise again. . And yes, we sold this past February for a nice profit in that trade. So, the longer these bond funds stay down, the more shares we accumulate at lower prices.

2. Senior Floating rate bonds. These bonds are down maybe 5% this year and holding up well. This is a hold for probably the next 5 years as interest rates may be higher over that time frame. These generally act well in a rising rate environment.

3. Gold & Silver. These securities were acting very well through April of this year until the massive wave of stock market selling took place. In that
 
environment, a liquidity crunch, everything gets sold off and has continued through June 30th. I am still very positive of this space. Let me explain. Gold and Silver may do well when the Federal Reserve stops hiking interest rates. We just had a .75 Basis point hike in June and another one is expected in July. If the economy is headed for a slowdown, recession, the Federal Reserve may have to stop raising interest rates after the September hike. This is my belief. And if I am correct, the gold and silver markets could sniff this out sometime over the summer. My thinking is that we may be close to a final bottoming out process, consolidation period right here.

4. Stock Markets. The Nasdaq market is down around 30% year to date with plenty of individual growth stocks down more than 50%. The S&P 500 is down more than 20% as oil stocks helped in limiting the loses this year. But, oil stocks in the past 2 weeks are down roughly 20% as they may be sniffing out the upcoming possible slowdown. We shall see.

So just to recap. Most market sectors have been hit hard this year. If I am right about the slowdown, and the Federal Reserve stopping the rate hiking cycle towards the end of this year, we can certainly get some strong tailwinds in all markets at that time.

I know it has been very difficult. I truly understand and have been fighting the fight each day for you. I know this is when you need me the most. I believe better days are coming my friends. Enjoy the rest of your summer, and we are here for you all.

Frank Cangelosi
Wealth Manager and Financial Advisor

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.