10 market themes to keep an eye on during the 1st quarter of 2023.
This collection of market insights highlights 10 themes we believe are most likely to shape the investment environment this quarter.
2022 Was A Difficult (and Historic) Year for Stocks & Bonds
Mega Cap Stocks Underperformed During 2022
Fixed Income Yields Sit Above Long-term Averages
Energy Prices Reverse Lower After Spiking During Early 2022
Headline Inflation Has Peaked, but Key Categories are Still Rising
Labor Market Shortage Could Keep Wage Inflation High
Consumer Sentiment Rebounds from Record Low as Inflation Eases
Wall Street Forecasts Single-Digit Earnings Growth in 2023
U.S. Housing Market Shows the Impact of Interest Rate Hikes
More Banks Are Tightening Lending Standards
The rising sun of 2024 brings new hope for global markets! This sun shines a little brighter on the Indian economy as it gets off the tag of a 'fragile economy' to emerge as a robust one. The world economy is headed towards a 'Paradigm Shift' with India leading the way.
Explore this shift further with our Annual Outlook Report 2024!
#ICICIPrudentialMutualFund #AnnualOutlook #ETF
Positive signs of a continued recovery were prevalent in Q1 2021, with vaccinations gaining critical mass, GDP showing growth, and the country opening back up for business. Additionally, M&A continues to be a tidal wave of activity, preparing to make landfall in Q4 2021.
Mercer Capital's Bank Watch | August 2021 | 2021 Mid-Year Core Deposit Intang...Mercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, this monthly newsletter is focused on bank activity in five U.S. regions. Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
• Interbank call money rates remained mostly below the RBI’s repo rate of 4% in June as overall systemic liquidity remained surplus.
• Currency in circulation rose 20.6% on-year in the week ended June 19, 2020, compared with 12.7% growth a year ago. The RBI, via its liquidity window, absorbed Rs 3770.33 billion on a net daily average basis in June 2020, compared with net liquidity absorption of Rs 5114.71 billion in May 2020.
• Bank credit growth rose 6.2% on-year in the fortnight ended June 5, 2020, compared with 6.5% on-year growth reported in the fortnight ended May 8, 2020.
10 market themes to keep an eye on during the 1st quarter of 2023.
This collection of market insights highlights 10 themes we believe are most likely to shape the investment environment this quarter.
2022 Was A Difficult (and Historic) Year for Stocks & Bonds
Mega Cap Stocks Underperformed During 2022
Fixed Income Yields Sit Above Long-term Averages
Energy Prices Reverse Lower After Spiking During Early 2022
Headline Inflation Has Peaked, but Key Categories are Still Rising
Labor Market Shortage Could Keep Wage Inflation High
Consumer Sentiment Rebounds from Record Low as Inflation Eases
Wall Street Forecasts Single-Digit Earnings Growth in 2023
U.S. Housing Market Shows the Impact of Interest Rate Hikes
More Banks Are Tightening Lending Standards
The rising sun of 2024 brings new hope for global markets! This sun shines a little brighter on the Indian economy as it gets off the tag of a 'fragile economy' to emerge as a robust one. The world economy is headed towards a 'Paradigm Shift' with India leading the way.
Explore this shift further with our Annual Outlook Report 2024!
#ICICIPrudentialMutualFund #AnnualOutlook #ETF
Positive signs of a continued recovery were prevalent in Q1 2021, with vaccinations gaining critical mass, GDP showing growth, and the country opening back up for business. Additionally, M&A continues to be a tidal wave of activity, preparing to make landfall in Q4 2021.
Mercer Capital's Bank Watch | August 2021 | 2021 Mid-Year Core Deposit Intang...Mercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, this monthly newsletter is focused on bank activity in five U.S. regions. Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
• Interbank call money rates remained mostly below the RBI’s repo rate of 4% in June as overall systemic liquidity remained surplus.
• Currency in circulation rose 20.6% on-year in the week ended June 19, 2020, compared with 12.7% growth a year ago. The RBI, via its liquidity window, absorbed Rs 3770.33 billion on a net daily average basis in June 2020, compared with net liquidity absorption of Rs 5114.71 billion in May 2020.
• Bank credit growth rose 6.2% on-year in the fortnight ended June 5, 2020, compared with 6.5% on-year growth reported in the fortnight ended May 8, 2020.
Elevation Wealth Management's quarterly review of the investment, financial, and economic landscape as of September 30, 2013. Key take-aways and useful insights for average and sophisticated investors alike.
We believe that the divergence between Value and Growth stocks continues to prevail, & that volatility is a factor which is inherent in equity as an asset class.
Annual Equity Outlook 2022 | ICICI Prudential Mutual Fundiciciprumf
The current market scenario reminisces one of Shifting Sands wherein volatility may prevail due to dynamically changing macros. This warrants the need for active management. Hence, we recommend schemes that have flexibility to invest across different asset classes, Marketcap & Themes
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
2022 was generally turbulent for investors, especially those with a traditional stocks and bonds portfolio, who were hit particularly hard by the year’s headwinds. With inflation, Russia’s war with Ukraine, aggressive central bank tightening, and China’s lockdowns driving volatility, global economies have been grappling with rapid adjustments in interest rates, sentiment and valuations. However, while fears of recession loom, there may be some silver linings ahead for agile investors.
The Nicola Wealth Strategic Outlook 2023, which was hosted by President | Client Relationship Manager, David Sung, featured presentations by Chairman & CEO John Nicola, CIO Rob Edel, CFO & Head of Private Capital Bijal Patel, and Managing Director, Real Estate Mark Hannah. Each professional shared their perspectives on the trends that are shaping the investing environment, and how these developments may impact investors and asset classes over the coming year.
Mercer Capital's Bank Watch | June 2022 | Bond Pain and Perspective on Bank V...Mercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, this monthly newsletter is focused on bank activity in five U.S. regions. Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
Government’s release of Rs 86.55 billion to certain
banks for preferential allotment of shares, hopes of more reform
measures by the government in the upcoming Budget, and
sustained inflows from the foreign institutional investors (FIIs)
augured well for the local indices.
Read the full document to know more.
This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.
The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
Economy and equity markets: are they disconnected?Markets Beyond
Equity markets are not disconnected from the real economy and there no reason, under the current circumstances, to fear a market collapse. The S&P 500 is however no longer cheap.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
Elevation Wealth Management's quarterly review of the investment, financial, and economic landscape as of September 30, 2013. Key take-aways and useful insights for average and sophisticated investors alike.
We believe that the divergence between Value and Growth stocks continues to prevail, & that volatility is a factor which is inherent in equity as an asset class.
Annual Equity Outlook 2022 | ICICI Prudential Mutual Fundiciciprumf
The current market scenario reminisces one of Shifting Sands wherein volatility may prevail due to dynamically changing macros. This warrants the need for active management. Hence, we recommend schemes that have flexibility to invest across different asset classes, Marketcap & Themes
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
2022 was generally turbulent for investors, especially those with a traditional stocks and bonds portfolio, who were hit particularly hard by the year’s headwinds. With inflation, Russia’s war with Ukraine, aggressive central bank tightening, and China’s lockdowns driving volatility, global economies have been grappling with rapid adjustments in interest rates, sentiment and valuations. However, while fears of recession loom, there may be some silver linings ahead for agile investors.
The Nicola Wealth Strategic Outlook 2023, which was hosted by President | Client Relationship Manager, David Sung, featured presentations by Chairman & CEO John Nicola, CIO Rob Edel, CFO & Head of Private Capital Bijal Patel, and Managing Director, Real Estate Mark Hannah. Each professional shared their perspectives on the trends that are shaping the investing environment, and how these developments may impact investors and asset classes over the coming year.
Mercer Capital's Bank Watch | June 2022 | Bond Pain and Perspective on Bank V...Mercer Capital
Brought to you by the Financial Institutions Team of Mercer Capital, this monthly newsletter is focused on bank activity in five U.S. regions. Bank Watch highlights various banking metrics, including public market indicators, M&A market indicators, and key indices of the top financial institutions, providing insight into financial institution valuation issues.
Mercer Capital's Value Focus: Auto Dealer Industry | Mid-Year 2014Mercer Capital
Mercer Capital's Auto Dealer Industry newsletter provides perspective on valuation issues. Each newsletter also includes a macroeconomic trends, industry trends, and guideline public company metrics.
Government’s release of Rs 86.55 billion to certain
banks for preferential allotment of shares, hopes of more reform
measures by the government in the upcoming Budget, and
sustained inflows from the foreign institutional investors (FIIs)
augured well for the local indices.
Read the full document to know more.
This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets.
The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
Economy and equity markets: are they disconnected?Markets Beyond
Equity markets are not disconnected from the real economy and there no reason, under the current circumstances, to fear a market collapse. The S&P 500 is however no longer cheap.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
Know more: https://www.synapseindia.com/technology/mean-stack-development-company.html
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
https://viralsocialtrends.com/vat-registration-outlined-in-uae/
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
1. See disclosures at the end of the presentation.
10 Market Themes for 3Q 2022
As of July 1, 2022
www.riverbendinvestments.com
2. See disclosures at the end of the presentation.
10 Market Themes for 3Q 2022
This collection of market insights highlights 10 themes we believe are
most likely to shape the investment environment this quarter.
1. Speed & Magnitude of Interest Rate Increases Across Tightening Cycles
2. Year-to-Date Stock & Bond Returns Highlight 2022’s Unique Environment
3. Higher Interest Rates = Lower Stock Valuation Multiples
4. Bitcoin & Cryptocurrency Assets Continue to Trade Lower
5. Higher Interest Rates Start to Impact the Housing Market
6. Retail Sales Data Shows Inflation’s Impact on Consumer Spending
7. Bond Yields Rise as Fed Tightens & Investors Reprice Credit Risk
8. Seasonality Patterns Suggest Gasoline Prices Could Decline This Fall
9. Inflation Relief on the Horizon?
10. Corporate Earnings Estimates Could be Revised Lower
John Rothe, CMT
Founder & Chief Investment Officer
johnrothe@riverbendinvestments.com
2
3. See disclosures at the end of the presentation.
Speed & Magnitude of Interest Rate Increases Across Cycles
3
Disclosures: Data is sourced from Federal Reserve. July 2022 projection based on CME FedWatch Tool as of 6/30/2022.
Cumulative Change in the Federal Funds Rate
Indexed to Zero First Week of Interest Rate Increase
U.S. Federal FundsTarget Rate (%)
Historical Federal Funds Rate (1987-Present)
Mar-88
3.25%
Feb-94
3.00%
Jul-99
1.75%
Jul-04
4.25%
Dec-16
2.00%
July 2022
Projection
2.25%
0%
1%
2%
3%
4%
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95
100
105
# of Weeks Since First Interest Rate Increase of Cycle
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Tightening Cycles
Fed Funds Rate
4. See disclosures at the end of the presentation.
Year-to-Date Stock & Bond Returns Highlight 2022’s Unique Environment
4
Disclosures: Data is sourced from MarketDesk. Note: Returns represent total returns, which include dividends and interest received. 2022 YTD performance is calculated as of 6/30/2022.
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
-20%
-10%
0%
10%
20%
-50% -25% 0% 25% 50%
Bloomberg
U.S.
Bond
Aggregate
Total
Return
S&P 500 Total Return
5. See disclosures at the end of the presentation.
Higher Interest Rates = Lower StockValuation Multiples
5
Disclosures: Data is sourced from MarketDesk and Federal Reserve. Past performance does not guarantee future results.
Rising interest rates tend
to pressure stock market
valuations lower.
6. See disclosures at the end of the presentation.
Bitcoin & Cryptocurrency Assets Continue toTrade Lower
6
Disclosures: Data is sourced from CME Group and is based on CME’s Bitcoin Futures Contracts.
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22
Bitcoin
Price
in
USD
Bitcoin has fallen nearly -70%
since November 2021
7. See disclosures at the end of the presentation.
2%
3%
4%
5%
6%
7%
8%
9%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
❶ 30-Year Fixed Mortgage Rate
Higher Interest Rates Start to Impact the Housing Market
7
Disclosures: Data is sourced from Federal Reserve, National Association of Realtors, and University of Michigan.
50
75
100
125
150
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
❷ Housing Buying Conditions
3,000
4,000
5,000
6,000
7,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
❸ Existing Home Sales (000s)
-20%
-10%
0%
10%
20%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
❹ Case Shiller Home Price Index (1-Year Change)
Rising Interest Rates Push
Mortgage Rates Higher…
... Which Weakens Home Buyer
Sentiment …
... Which Translates into
Fewer Buyers…
... & Could Stall Home
Price Growth
8. See disclosures at the end of the presentation.
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
1-Year
Change
in
Retail
Sales
(excluding
food)
Y/Y Change in Retail Sales
12-Month Moving Average
Retail Sales Data Shows Inflation’s Impact on Consumer Spending
8
Disclosures: Data is seasonally adjusted and sourced from U.S. Census Bureau. To smooth the trend, retail sales excludes food which is historically a more volatile segment.
1-Month
Change
-4%
-1%
-1%
0%
0%
0%
1%
1%
4%
-6% 0% 6%
Auto & Auto Parts
Electronics/Appliances
Home Furnishings
Pharmacies
Clothing
Building Materials
Restaurants
Grocery Stores
Gas Stations
9. See disclosures at the end of the presentation.
BondYields Rise as FedTightens & Investors Reprice Credit Risk
9
Disclosures: Data is sourced from Federal Reserve and MarketDesk. Bond categories represented by the following indices: Developed Gov't Bonds (ICE BofA Developed Markets Sovereign Bond), Emerging Gov't Bonds (ICE BofA
Emerging Markets Sovereign Bond), U.S. Bond Aggregate (Bloomberg US Aggregate), Mortgage Backed Securities (ICE BofA US Mortgage Backed Securities), IG Municipal Bonds (ICE BofA US Municipal Securities), HY
Municipal Bonds (ICE BofA US Municipal High Yield Securities), IG Corporate Bonds (ICE BofA US Corporate), HY Corporate Bonds (ICE BofA US High Yield).
1.5
0.7
4.2
1.8 1.9
1.1
2.1
2.4
4.3
3.1
2.2
5.0
3.8 3.8
3.3
4.7 4.8
8.8
U.S. 10-Year
Treasury
Developed
Gov't Bonds
Emerging
Gov't Bonds
U.S. Bond
Aggregate
Mortgage Backed
Securities
IG Municipal
Bonds
HY Municipal
Bonds
IG Corporate
Bonds
HY Corporate
Bonds
December 31, 2021 June 30, 2022
Yield to Worst Across Bond Types (%)
10. See disclosures at the end of the presentation.
0%
20%
40%
60%
80%
100%
0%
10%
20%
30%
1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec
Average YTD Change in Gas Prices Since 2000 (Left Axis)
YTD 2022 (Right Axis)
Seasonality Patterns Suggest Gasoline Prices Could DeclineThis Fall
10
Disclosures: Data is based on New York Harbor RBOB Gasoline Front Month Futures. Sourced from CME Group.
Gasoline prices historically reach
their peak during the summer
months before falling during the
second half of the year.
Average Year
11. See disclosures at the end of the presentation.
-60%
0%
60%
120%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2015
2016
2017
2018
2019
2020
2021
2022
2023
Core Consumer Price Index (Left Axis)
1-Year Change in Job Openings – Advanced 6-months (Right Axis)
Job openings historically
lead CPI inflation by 6
months, suggesting inflation
pressures could ease during the
second half of 2022.
-80
0
80
160
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
OECD Global Inflation (Left Axis)
S&P GSCI Commodity ETF – Advanced 3-months (Right Axis)
Inflation Relief on the Horizon?
11
Disclosures: Data is sourced from MarketDesk, OECD, Federal Reserve, and U.S. Census Bureau.
Job Openings vs CPI Inflation
1-Year Change; Job Openings Historically Lead by 6 Months
Commodity Prices vs Global Inflation
1-Year Change (%)
Commodity prices historically
lead global inflation by 3
months, suggesting inflation
pressures could ease during the
second half of 2022.
12. See disclosures at the end of the presentation.
-30%
-20%
-10%
0%
10%
20%
30
40
50
60
70
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
ISM Manufacturing PMI (Left Axis)
3-Month Change in NTM S&P 500 EPS Consensus Estimate (Right Axis)
Corporate Earnings Estimates Could be Revised Lower
12
Disclosures: Data is sourced from MarketDesk, FactSet, and Institute for Supply Management.
Corporate earnings estimates are
historically revised lower as the ISM
Manufacturing PMI declines.
13. See disclosures at the end of the presentation.
Definitions
Consumer Price Index (CPI): Measures the changes in the price level of a basket of consumer goods and services purchased by households.
Inflation: A general rise in price level relative to available goods and services.
Producer Price Index (PPI): Measures the average changes in prices received by domestic producers for their output.
Real Yield: Calculated as the Nominal Yield minus CPI rate.
Unemployment Rate: A lagging economic indicator which is calculated as the percent of the labor force that is jobless.
University of Michigan Consumer Sentiment Index: A monthly survey that asks consumers questions about their financial standing and views on both the current
and future economy.
ISM Purchasing Managers Index: The ISM manufacturing index, also known as the purchasing managers' index (PMI), is a monthly indicator of U.S. economic
activity based on a survey of purchasing managers at more than 300 manufacturing firms. It is considered to be a key indicator of the state of the U.S. economy.
Please see disclosures at end of
presentation.
13
Questions?
Get inTouch!
Email john.rothe@riverbendinvestments.com
14. See disclosures at the end of the presentation.
Definitions
2Y / 10Y / 30-Year Treasury Bonds: Treasuries are debt obligations issued and backed by the full faith and credit of the U.S. government.
Bitcoin Futures: CME’s Bitcoin futures contract, ticker symbol BTC, is a USD cash-settled contract based on the CME CF Bitcoin Reference Rate (BRR), which serves as
a once-a-day reference rate of the U.S. dollar price of bitcoin. The BRR aggregates the trade flow of major bitcoin spot exchanges during a one-hour calculation
window into the U.S. dollar price of one bitcoin as of 4 p.m. London Time.
CBOE Market Volatility Index (VIX): Measures the market's expectations of future volatility and is based on S&P 500 options activity
Consumer Price Index (CPI): Measures the changes in the price level of a basket of consumer goods and services purchased by households.
Federal Fund’s Rate: The target interest rate set by the Federal Reserve at which commercial banks borrow and lend excess reserves overnight.
Federal Reserve: The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more
flexible, and more stable monetary and financial system.
Forward Price to Earnings Ratio: The forward P/E ratio (or forward price-to-earnings ratio) divides the current share price of a company by the estimated future
(“forward”) earnings per share (EPS) of that company.
Growth Stocks: Growth stocks are companies expected to grow sales and earnings at a faster rate than the market average.
Inflation: A general rise in price level relative to available goods and services.
ISM Purchasing Managers Index (PMI): The ISM manufacturing index, also known as the purchasing managers' index (PMI), is a monthly indicator of U.S. economic
activity based on a survey of purchasing managers at more than 300 manufacturing firms. It is considered to be a key indicator of the state of the U.S. economy.
Price Return: The rate of return on an investment portfolio, where the return measure takes into account only the capital appreciation of the portfolio, not including
income generated in the form of interest or dividends.
Prime Interest Rate: A base rate used by banks to price short-term consumer and business loans.
Real Earnings: Usual weekly earnings represent earnings before taxes and other deductions and include any overtime pay, commissions, or tips usually received. Real
Earnings adjust these dollar amounts the Consumer Price Index.
Real Yield: The interest rate earned on a fixed income investment after factoring in the impact of inflation as measured by the Consumer Price Index (CPI).
Total Return: Return on a portfolio of investments including capital appreciation and income received on the portfolio.
U.S. Labor Participation Rate: The percentage of the population that is either working or actively looking for work
U.S. Total Payrolls: A measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm
employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product
(GDP).
Unemployment Rate: A lagging economic indicator which is calculated as the percent of the labor force that is jobless.
Value Stocks: Stocks that are inexpensive relative to the broad market based on measures of fundamental value (e.g., price to earnings or price to book).
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15. See disclosures at the end of the presentation.
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Editor's Notes
Webinar Introduction
Hello and thank you for joining us today.
Welcome to the Quarterly Market Perspectives Client Webinar for the 3rd quarter of 2022.
Key Talking Points
Today we will be discussing several market moving topics and how they might impact your portfolio over the coming months.
Key Talking Points
The market’s focus on Federal Reserve policy remains unchanged as stubbornly high inflation forces the Fed to raise interest rates and shrink its balance sheet. The chart on the left side tracks the federal funds rate and shows the Fed’s rapid-fire interest rate increases starting in March 2022.
How does this tightening cycle compare to prior cycles? The most notable difference is the speed and size of the interest rate increases. The chart on the right compares the current cycle’s federal funds rate path against the last five cycles. Factoring in the +0.75% increase at the June meeting, the Fed has raised interest rates +1.50% since the first increase in March. Investors expect the Fed to maintain its +0.75% pace at the late-July meeting, which would make 2022 the fastest +2.25% increase compared to the last five cycles. Investors expect the Fed to keep raising interest rates at its meetings later this year, although the number and size of the increases remain open questions.
From a historical perspective, the chart shows the current Fed tightening cycle has more in common with the 1988 and 1994 cycles than post-2000 cycles. It’s a market environment investors haven’t experienced in a long time. The Fed’s aggressive actions are being driven by widespread price pressures across food, energy, housing, airfares, vehicles, etc. There are concerns high inflation could become entrenched, as well as significant uncertainty about how high and fast the Fed will need to raise interest rates to contain inflation. This raises a particularly concerning risk – persistently high inflation could provoke the Fed to tighten too much and negatively impact economic growth. The result is a market trying to navigate uncharted waters.
Key Talking Points
The first slide showed how fast the Federal Reserve is raising interest rates, and this slide shows the financial market impact. The Fed’s aggressive tightening actions are increasing market volatility and causing stock and bond prices to trade lower. The S&P 500 is now in a bear market, which is defined as a -20% decline from recent highs, and interest rates sit near multi-year highs. The 2-year Treasury yield recently rose to its highest level since 2007 as investors bet 40-year high inflation will push the Fed to be more aggressive.
This scatter plot compares annual stock and bond returns since 1989. The dots represent the intersection of the S&P 500’s total return and the Bloomberg U.S. Bond Aggregate’s total return for each calendar year. The analysis highlights the challenging and unusual start to 2022. The ‘YTD 2022’ dot is the only dot in the lower left quadrant with stocks and bonds both declining more than -10% this year. If 2022 ended today, it would mark the S&P 500’s third worst year, and bond’s worst year, since 1989.
How unique is the current market environment? You will notice every year since 1989, except for 2022, is outside of the lower left quadrant. This indicates it is rare for both stocks and bonds to produce negative returns during a calendar year. Why are stocks and bonds declining together? The Federal Reserve is raising interest rates and shrinking its balance sheet by selling bonds, which pressures both stock and bond valuations. On the credit side, most bonds pay a fixed interest rate, which means bond prices must decline to offer a higher interest rate. On the equity side, interest rates represent the cost of money and are used as an input to value company shares. A higher interest rate typically decreases stock prices.
Key Talking Points
One of the main investment themes this year has been the decline in company valuations as interest rates rose. Why? In a world of negative real (i.e., after inflation) yields and low interest rates, investors are willing to take on more risk to generate a positive after inflation return. With interest rates and yields rising this year as the Fed tightens, investors now theoretically need to take less risk to generate the same return. This means riskier assets should decline in value to provide a more attractive risk-adjusted return. On a conceptual level, this is the messy valuation process the market is currently working through. It is trying to find the correct theoretical fair value of a company’s shares as interest rates rise.
Growth stocks, which are valued based on their future earnings, have borne the brunt of rising interest rates and declining valuations. This slide compares the valuation multiple investors assign to the estimated next 12-month earnings of the Nasdaq 100, which is viewed as a concentrated Growth index due to its Tech overweight. Note how the 10-year Treasury yield is inverted upside down on the right axis to demonstrate how higher interest rates correlate to a lower valuation multiple. The Nasdaq 100’s price-to-earnings multiple was 29.2x on 12/31/2021 when the 10-year Treasury yield was ~1.5%. As of 6/24/2022, the 10-year Treasury yield has risen to ~3.1% and the valuation multiple has dropped to 20.8x.
Key Talking Points
In keeping with the negative impact rising interest rates have on risk assets, this slide tracks the price of bitcoin in U.S. dollars. Bitcoin is a cryptocurrency that is used to facilitate transactions directly with another party, without an intermediary like a bank. It’s a relatively new asset that investors can invest in and traders can speculate on, and it is considered a riskier asset class.
The chart shows bitcoin prices soared from ~$10,000 during October 2020 to ~$62,000 during April 2021. The price surge coincided with the Fed’s decision to cut interest rates to near 0% and purchase bonds, as well as Congress’s decision to issue multiple rounds of stimulus checks. The two measures flooded the financial system with liquidity and encouraged investors and traders to take on more risk to generate higher returns.
Now that liquidity is being removed by the Fed as it raises interest rates and shrinks its balance sheet, bitcoin is crashing in tandem with risky assets. The chart shows bitcoin has plunged nearly -70% from ~$60,000 during November 2021 to ~$20,500 in late June 2022. Additional interest rate increases and diminishing liquidity could push bitcoin’s price lower from current levels.
Key Talking Points
This slide examines the impact rising interest rates have on the housing market. Starting with the upper left chart, the 30-year fixed mortgage rate has risen from 3.27% at the end of 2021 to 5.83% at the end of the second quarter, a +2.56% increase in 6 months. Moving clockwise to the upper right chart, data from the University of Michigan’s Consumer Sentiment Index shows an increasing number of respondents believe buying conditions for houses are worsening. The weakening homebuyer sentiment coincides with the surge in mortgage rates and soaring home prices.
Moving clockwise to the lower right chart, data from the National Association of Realtors shows existing home sales continue to decline. Separate housing market data indicates the annualized pace of new housing starts and building permits for future building have both fallen more than -10% since the end of 2021.
Moving clockwise to the final chart in the lower left, the last piece of the housing cycle equation – home prices. The chart tracks the Case Shiller Home Price Index and shows the surge in home prices during the past two years as the pandemic and low interest rates unleashed a wave of strong housing demand. As the housing market starts to cool, are home prices the next datapoint to drop?
Key Talking Points
This slide tracks year-over-year retail sales growth. The chart shows the surge in consumer spending during the pandemic as consumers spent less money on services and more money on goods. While year-over-year retail sales growth remains near the upper end of the last 20-year range, the chart shows growth has slowed considerably during the first half of 2022. The steep decline coincides with persistent inflation pressures and the Fed’s decision to raise interest rates. The downward trend suggests consumer demand is starting to soften.
The box in the upper right corner of the chart tracks month-over-month retail sales growth across multiple categories during May. Month-over-month retail sales growth turned negative during May as retail sales contracted -0.3%. A look within the major categories shows consumers spent more at gas stations and grocery stores as gasoline and food prices rose and less on discretionary-related goods, such as autos and auto parts, electronics and appliances, and home furnishings. The data offers a near-term look at how high inflation is impacting and shifting consumer spending. It’s a concerning trend given consumer spending accounts for ~70% of the U.S. economy.
Key Talking Points
This slide compares bond yield movement across credit classes during the first half of 2022. The chart shows yields have risen sharply this year as the Federal Reserve has increased interest rates.
One area of the credit market that has experienced pressure lately is high yield corporate and municipal bonds. The chart shows the spread between corporate investment grade and high yield bonds has risen to 4% (i.e., 8.8%-4.8%) at the end of the second quarter, up from 1.9% (i.e., 4.3%-2.4%) at the end of 2021. Likewise, the spread between municipal investment grade and high yield bonds has risen to 1.4% (i.e., 4.7%-3.3%) from 1% (i.e., 2.1%-1.1%) over the same period.
Why does the wider spread matter? Credit spreads provide a barometer of risk sentiment and expected default risk. Bond investors are primarily focused on receiving interest payments and repayment of principal, while equity investors are more focused on the potential upside. The difference makes credit investors more cautious and suggests they are growing more concerned about credit and default risk in the coming quarters.
Key Talking Points
Soaring oil prices and the corresponding increase in gasoline prices have been another big theme this year. The two are a contributing factor to the current 40-year high inflation readings we are experiencing.
Is there relief ahead? Historical data indicates perhaps. This slide charts the average price change of gasoline from January through December for all calendar years since 2000. It shows gasoline prices historically reach their peak each year during the summer months before steadily declining during the second half of the year. We suspect this is related to increased driving over the summer as more drivers hit the road for vacations. Regardless of the cause, the data is encouraging as it suggests we may see some much-needed relief at the pump this year.
Before moving on to the next slide, we want to emphasize this is the average path gasoline prices take each year, which means this year could play out different. We will have to wait and see how the situation develops.
Key Talking Points
This slide takes another look at the potential for inflation relief in the coming months. The chart on the left compares year-over-year inflation growth against the last 12-month price change of the broad commodity index. To demonstrate the relationship between inflation and commodity prices, the last 12-month price change of commodities is advanced forward three months. The chart indicates commodity prices historically lead inflation, which is supported by the current environment (i.e., commodity prices are a significant contributing factor to current inflation pressures). Like the prior slide, the data indicates slowing commodity price appreciation could ease current inflation pressures. The question is how quick any potential relief could arrive.
The chart on the right compares the growth in job openings against year-over-year inflation growth. To demonstrate the relationship between job openings and inflation, job openings growth is advanced by six months. The chart indicates an increase in job openings historically puts upward pressure on inflation, which syncs up with the tight labor market and resulting wage growth that has pushed inflation higher recently. This year has seen a steep drop in the growth rate of job openings, suggesting inflationary pressure from the labor market could also ease during the second half of 2022.
Key Talking Points
The final slide looks at corporate earnings estimates. The chart compares the ISM Manufacturing PMI, which is a monthly survey of purchasing managers at more than 300 manufacturing firms, against the last 3-month change in the S&P 500’s estimated next 12-month earnings. For reference, an ISM Manufacturing PMI reading above 50 signals a manufacturing expansion, while a reading below 50 points to a manufacturing contraction.
What’s the takeaway? Corporate earnings estimates are historically revised lower as the ISM Manufacturing PMI declines. This is concerning given the ISM Manufacturing PMI’s current downward trend. Companies are scheduled to start reporting their second quarter 2022 earnings results in July. We will be watching the results and monitoring revisions to earnings estimates in the coming months.
Closing Thoughts
Thank you everyone for joining us today as we hope this webinar has been insightful into the market themes our team is following as we work hard to manage your family’s wealth alongside ours.
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