What is it?
The Consumer Price Index (CPI) is a measure used to gauge inflation. Tracking CPI helps investors realize how prices have been impacted since the prior year.
“The data published by the US Bureau of Labor Statistics showed on Wednesday that inflation in the US, as measured by the Consumer Price Index (CPI), was 8.3% on a yearly basis in April. Although this print was lower than the March reading of 8.5%, it still surpassed the market expectation of 8.1%.”*
Why does it matter?
What this means is that inflation is still higher than expected even after coming down a little from the prior month. Because of that, the Fed may be more hawkish in their next meeting and aim to increase interest rates faster. If the expectation for rate hikes continues to change then we believe investors will continue to price that into the markets.
Stocks resume sell-off as market’s attempt at recovery falters
What is it?
Stocks in the U.S. were down last Thursday to extend a more bearish week in the markets.**
“The S&P 500 tumbled 1.8% to a fresh 2022 low, with the benchmark down more than 18% in the first 90 trading days of 2022 to mark its second worst start to a year, according to data from Compound Capital Advisors.”**
Why does it matter?
There have been talks about the possibility of the market bottoming. That would mean the stock market has reached the bottom of its move and would continue higher from here. With that said we are not in agreement with a vastly bullish outlook. We are anticipating a more bearish market outlook especially if the Fed is expected to continue raising rates within the next year.
The markets have not shot down aggressively. There seems to be a more institutional look to these moves as investors slowly reduce riskier positions and try to preserve capital. With that said, we believe that the markets could head lower if the Fed’s stance remains unchanged among other things. This is represented in many of our models. We are at a much lower net long position in terms of stock and ETF exposure to risk as we were toward the end of 2021. As these moves in the markets continue to develop we will keep you posted on whether we begin to add more long or short positions in the stock market.
Other articles we found interesting this week:
Current 401(k) portfolio
Our last portfolio reallocation: 4/11/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
*Eren Sengezer. “Forex Today: Dollar rally picks up steam on risk-aversion ahead of PPI data”. 5/12/22. FX Street. https://www.fxstreet.com/news/forex-today-dollar-rally-picks-up-steam-on-risk-aversion-ahead-of-ppi-data-202205120650
**Alexandria Semenova. “Stock market news live updates: Stocks resume sell-off as market’s attempt at recovery falters”. 5/12/22. Yahoo Finance. https://finance.yahoo.com/news/stock-market-news-live-updates-may-12-2022-223519270.html
Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.
Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.
Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it. We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.
Important Information regarding Registration Breakaway and/or Patrick Traverse offer Investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/. Breakaway is not affiliated with Belpointe. Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.