Thus far, 2022 has proven to be the exact opposite of 2021. Whereas last year was characterized by easy money, peak economic growth, and peak corporate profits, 2022 has seen a tightening of financial conditions, lower economic growth, and slower corporate profits. This combination has led to very difficult returns from various asset classes thus far in 2022. According to Morgan Stanley research, this is the worst first half return for the S&P 500 Index since 1962, the Japane
On June 9th, we distributed a piece (click here) arguing that if CPI surprised to the upside, the S&P would fall precipitously. This came to fruition as June was disastrous for risk assets.
Just as the markets sold off on last month’s unexpected CPI overshoot, they could equally move sharply higher if this week’s CPI report surprises to the downside. Why? YTD, we’ve seen near-record market outflows in stocks and bonds, overwhelming bearish sentiment indicators, and meaning