Churchill Management - Commentary
by Craig Love, on July 13, 2022
- Stocks continue to struggle to find footing. After a near 10% rally/bounce to end the month of May, June started flat and then turned down and made new lows for the year.
- The questions on all investor's minds are, will the market stabilize and put in a bottoming process, or is any positive movement just a Bear Market counter-trend rally?
- It is still too early to tell. The history of Bear Markets is filled with short-term bottoming formations that lead to elongated rallies that do not hold. Therefore, for now, in our tactical strategies, we remain cautious.
- The market is now struggling with the question of whether the Federal Reserve will tighten so much that it creates a recession.
- Whether we experience a recession is important. Bear markets that coincide with recessions tend to be worse than those that do not.
- The commonly held definition of a recession is two consecutive negative quarters of declining GDP. We have already seen a negative GDP reading for Q1.
- Second-quarter GDP comes out July 28th, which happens to be one day after the Fed meeting where it is expected to raise rates another 75 basis points.
- Volatility is likely to remain high over the coming months. We expect the economic data releases will be very uneven, with a mixture of good and bad news on both the inflation and jobs front.
CHURCHILL MANAGEMENT GROUP
Source: Churchill Management Group
** This report is meant to inform the reader of our current market opinion, which we, as professional money managers, use in our decision-making. It should be noted that stock market and bond market data are subject to varying interpretations and any one interpretation will not necessarily guarantee investment success. The information obtained from the sources specified herein and used as basis for our current market opinion is believed reliable, but we do not guarantee the accuracy of such information.