By Tim Courtney, Chief Investment Officer
As volatile and negative as the markets have been over the last several weeks, all has not been in vain. There are signs that markets are making healthier, more sustainable decisions with capital. The most speculative areas of the market in cryptocurrencies and NFTs are being priced down1 while the housing market seems to be stabilizing after buyers in 2021 went wild with rich offers.2 Even the so-called “millennial lifestyle subsidies” (unrealistically low-priced services from money losing companies such as Uber and DoorDash) are ending and companies are raising fees to become profitable.3
Much of this change is largely due to the Federal Reserve raising rates from basically zero in 2020.4 Heading into the second half of the year, we will be closely monitoring the market’s reaction to this movement, as well as the three key themes outlined below:
We still think inflation will ultimately determine market direction this year. If inflation begins fading, it will take pressure off interest rates and help stock and bond valuations. If inflation continues to force interest rates higher and higher, there will be increasing pressure on valuations. As always, if you have any questions, please contact your Exencial advisor.
For more on what we’ll be watching in the second half of the year, please join us on Wednesday, July 20 at 12 p.m. ET/11 a.m. CT for Exencial’s semi-annual client Mid-Year Market Outlook webinar. To register, click here.
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