Are We There Yet?

Are We There Yet?

Are we there yet?

The famous line from kids on a car trip who can’t wait to get to their vacation destination.

How does this apply to the markets?. . . and notice I didn’t limit this to the equity markets.

Everything is being sold!

  • Commodities
  • Equities in every sector
  • Cryptocurrencies
  • Bonds
  • Gold

Just look at the table below.

A breakdown of returns by market sectors

Every sector and investment theme is well below where it started on January 1, 2022 except for Energy and Gold.

If we look back to June 7th, every sector and investment theme is negative – all of them – and most by double digits.

If we assume 8 trading days since June7th and take the average loss since then of -11%, a -11% return annualizes to a loss one year from now of 97%. This can’t continue at that rate.

So, are we there yet?

No one really knows because no one has a crystal ball (at least one that works anyway), but the indiscriminate selling of every asset class is clearly panic behavior.

The markets seem to be acting irrationally to a Fed that doesn’t seem to know what they are doing because they are raising interest rates too aggressively.

Commodity prices are deflating (including energy recently - see table above), inventories are bloated, and the main thing causing prices to go higher is the increased cost of fossil fuels.

Breakdown of recent CPI data

At this point the best strategy is to stay the course and tough it out. This insane selling behavior can’t continue for very much longer.

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