Insight Archive - Concord Asset Management

Weekly Market Insights – Monday, March 27, 2023

Mixed Message Provokes Volatility:

Modest gains in major market indices masked sharp volatility amid the uncertainty of mixed messaging from public officials and revived banking fears.

Over the last month, The Dow Jones Industrial Average returned –1.03%, while the S&P 500 returned 0.32%. The Nasdaq Composite Index returned 3.32%.

Source: Charles Schwab & Co, Inc.

A Turbulent Week for Stocks

The stock market was unable to find sustained direction as investors weighed comments from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. Stocks initially rose as banking fears eased following a deal to acquire a troubled Swiss bank. Optimism was further fueled by Yellen, who said the government could intervene to protect depositors if more bank issues materialized.

Enthusiasm faded, however, when Yellen subsequently testified that the Treasury was not working on any blanket insurance for bank deposits and by the Fed’s warning that banking turmoil could shrink lending access — the volatile week ended with sharp intraday price swings, shrugging off revived European banking concerns.

Rate Hike Cycle Ending?

Last week, the Federal Open Market Committee (FOMC) meeting was particularly noteworthy. Fed officials were placed in the difficult position of balancing the banking system’s opposing risks of still-high inflation and stressors. The Committee had considered leaving rates unchanged given banking stressors but unanimously voted to raise rates by 0.25%, citing elevated inflation, resilient economic activity, and a strong labor market.¹

The official announcement hinted that the Fed might soon be done with raising rates while also stating it was too early to ascertain the degree to which the economy could slow from the current banking strains.¹

This Week: Key Economic Data

Source: Bloomberg

This Week: Companies Reporting Earnings

Source: EarningsWhispers

At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management

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Footnotes and Sources

¹The Wall Street Journal, March 22, 2023

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please Note: If you are an IA Firm client, please remember to contact IA Firm in writing if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. IA Firm shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are an IA Firm client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Q4 2022 Report: Don’t Call It A Pivot

Don’t Call It A Pivot

KEY OBSERVATIONS

Inflation started to show signs of moderating. The Federal Reserve continued raising rates, but signaled a slowdown for the pace of future hikes.
The bear market rally that started in October continued well into the late fourth quarter. Stocks and bonds both showed strong returns amid declining volatility.
While the stock and bond markets’ direction implied optimism about a potential end to monetary tightening, inflation stressors like strong wage gains and low unemployment provide a contradictory set of data points.

Click to download this report

ECONOMIC COMMENTARY

Inflation Still A Threat: No Cause Yet For A Party Or A Pivot

There are three concurrent stories impacting the global economy and financial markets. The first is the rise of inflation in the United States and Europe due to both the pandemic and central bank policy responses to the pandemic. The second is the continuing War between Ukraine and Russia, putting the European post-COVID- 19 recovery in jeopardy and leading to rises in the prices of energy and agricultural commodities. The third is uncertainty and tension created by China’s internal and external policies: the continued effect of COVID-19 lockdown policies on the supply of goods into and out of China, as well as the regime’s ever-present saber-rattling against Taiwanese independence.

Inflation continued to be the dominant concern impacting markets and investor risk appetite, with a decidedly risk-on mentality driving asset prices in the fourth quarter. The financial markets story was better in Q4 – with both stocks and bonds rallying and the Federal Reserve slowing the pace of rate increases to 50 basis points (0.5%) in December. Still, we believe that it’s much too early to be breaking out the champagne and streamers.

Headline inflation may be slowing, mainly due to price drops on some big ticket items (e.g., cars, energy prices). At the same time, Core CPI [Consumer Price Index – excluding food and energy] remains stubbornly elevated. Unemployment remains low with job growth posting strong gains month over month, while wages continue to accelerate. Unemployment and core inflation are key data points the Fed is watching to measure how close they might be to accomplishing their mission.

In short, there’s a case to be made that the economic data point to the potential for a U.S. wage-price spiral. The threat of such a scenario has been driving the Fed’s hawkish decision-making. As long as wage growth and core CPI are stubbornly stuck above 5%, the idea that the Fed might stop raising rates seems like wishful thinking and a lot of happy talk by folks who want to keep the party going.

Investors are wise to refer to Fed Chair Jerome Powell’s August Jackson Hole speech as the most important and reliable indicator of where the Fed is headed. Powell said explicitly that he’s going to be Paul Volker, not Arthur Burns – the former being the “stop-go” dove who led the U.S. into the “Great Inflation” of the late 1970s; the latter being the steel-nerved hawk who tamed double-digit inflation and put it in the rear-view mirror.

Chair Powell may have recently tempered his tone on rate hikes, coming across at times even a bit wishy-washy. The Fed has returned to a data-dependent framework to identify the terminal Fed Funds rate for this cycle. We caution, however, that moderation in the rate of change is not a sign that the rate hike regime is coming to an end. In his December press conference, Chair Powell reiterated that the Fed “has more work to do.”

Market participants who believe that we’re going to be in a rate-cutting cycle in late 2023 need to put down the stemware. Such an outcome would require many things to come true that are low-probability outcomes in our view. A rate-cutting regime would have to be predicated on inflation disappearing while wages and employment are still going gangbusters. That kind of quick deceleration doesn’t make much sense, mathematically.

Abroad, the war in Ukraine continues unabated, and it’s highly unlikely the war will end any time soon. That means continued dislocations in energy and agricultural commodities. Europe is facing a recession and high inflation at the same time. While the major economies built large natural gas reserves earlier in 2022 and benefited from a mild Autumn, Europe will use a lot (if not all) of that store over the winter. European industrials will have to face production cuts, which will impede profitability and result in a declining trade surplus. This puts the European Central Bank (ECB) in the unenviable position of having to raise rates into a recession; if they don’t raise rates and the U.S. does, that would bring continued strength in the dollar relative to the Euro, and while this might be positive for European exporters, it is unclear how deep production cuts will need to be as energy rationing becomes more prevalent.

In China, supply chain disruptions due to its zero- COVID-19 policy are still fueling inflation in the U.S. While at first glance, China’s normalization would seem to be positive for markets, ending those policies and fully opening up China could have negative consequences for inflation in the U.S.

There was great hope after the conclusion of the 20th Party Congress that Chairman Xi would relax COVID-19 restrictions and China would open up again, but that has not happened yet. In the face of historic riots, it took weeks for even the barest concessions by the government. The economic impact of lingering COVID- 19 restrictions, compared to the rest of the world, marks a stark contrast: e.g., wait times for container ships at the Port of Los Angeles, which had one of the world’s worst backlogs during COVID-19, have nearly disappeared. At the same time, port congestion, cancelled sailings, and “blank” sailings continue to impede shipping goods from China to the U.S.

As a graphic display of this disparity, compare the two maps below. One shows port traffic at ports along the U.S. Pacific coast.

U.S. Destination Shipping

Source: Bloomberg Finance L.P., Mapbox, OpenStreetMap

The other shows port traffic along China’s Pacific coast. COVID-19 lockdowns, which are increasing port congestion in China, have had an enormous impact on the entire Chinese economy.

Chinese Destination Shipping

Source: Bloomberg Finance L.P., Mapbox, OpenStreetMap

But even if China did fully reopen, that could set the stage for a resurgence in global inflation. Right now, in its semi-lockdown state, China is using less oil and fewer commodities (e.g., copper, iron, aggregates) than typical. If fully opened, they would be using more resources and likely push up commodity and energy prices worldwide, at a time when the U.S. strategic petroleum reserve is at its lowest since the early 1980s. Moreover, in any return to growth, China would likely export their own inflation to the rest of the world through higher prices on exported goods. That means any relaxation of China’s zero-COVID-19 policies might not be the deflationary boon that many people expect. It could be inflationary.

MARKET COMMENTARY

Markets Being Irrationally Exuberant?

Stock and bond prices were both up in Q4, as measured by the S&P 500 Index and the Bloomberg Aggregate Bond Index. Market participants were oversold in September just as we started seeing signs that headline inflation was slowing and (hope against hope!) could roll over. The idea started to take root that we had passed “peak inflation” and that the Fed might be closer to the end of its tightening regime.

Stock and bond prices generally rose during Q4

Source: Bloomberg Finance L.P.

Thinking that we had hit bottom, giddy investors once again started buying risky assets like stocks and piling into long-duration bonds – because yields were attractive on a relative and absolute basis for the first time in over a decade. The latter also served as a hedge against an aggressive Fed causing a recession, as long-duration bonds might rally in the face of declining GDP. So, Q4 saw two trades (a risk-on trade and a flight to safety trade) driving equity and bond prices up in tandem.

As a side note, this continued 2022’s anomalous trend of highly positive correlations between stocks and bonds. Stocks and bonds typically move together with a small positive correlation. This means that if stocks are down, then bonds should go down far less and sometimes in the opposite direction. This is what creates a diversification benefit for investors. Over the past year, that correlation has been stubbornly high, meaning that investors in both stocks and bonds have suffered losses together and enjoyed the rallies together. For investors, cash and previously out of favor sectors (energy) have provided diversification benefits this year.

The other key development in Q4 was that market volatility declined significantly: the VIX Index, which measures expected stock volatility was down 27%, and the MOVE Index which measures bonds market volatility was down 22%. The chart above shows these indices coinciding with cycles of this year’s risk-on (bear market rallies) and risk-off (trend) periods in stocks and bonds.

Stock and bond volatility fell during Q4

Source: Bloomberg Finance L.P.

Despite all the negative economic pressures, stock market multiples at the end of 2022 are only slightly lower than where they were at the beginning of the year. Earnings and profit growth slowed during the year, but price-to-earnings (P/E) ratios remain high, at 18.6x trailing earnings to close 2022.

Based on the risk-on environment going into 2023, investors appear to be assuming higher inflation, higher interest rates, and high P/E ratios. One of those variables is going to end up being wrong. One side of that see-saw has to come down: either interest rates and inflation will decline or market multiples will have to fall. History would tell us it’s stocks that suffer: typically periods of high inflation and high interest rates yield below-average stock market returns.

FINAL THOUGHTS

Despite The 2022 Year-End Gift, Many Risks Remain

It has been humorously said that economists have predicted thirteen of the last five recessions. And it’s true that investors tend to climb the “Wall of Worry,” using that as an excuse to be negative on stocks, despite the long-run success of U.S. markets.

I agree with the axiom that, in the long run, the best time to buy stocks is when you have cash, but some indicators of shorter-term relative value are better than others. The spread between the 10-year Treasury yield and the 2-year Treasury yield is an indicator that is nearly perfect in predicting recessions. The chart below shows this spread against the shaded regions which are the official start and end dates of recessions. When this indicator turns negative (as it is today), it means that the yield on short-term money is higher than the yield on long-term money.

Market matrix US sell 2 year & buy 10 year bond yield spread

Source: Bloomberg Finance L.P.

Investors are paid to wait, instead of making long-term investments. Economic activity reflects this as capital allocators (CEOs and CFOs) prefer to hold cash as opposed to spending on new machines, inventories, or other investments in their businesses. Consumers prefer saving to consumption. As business activity reflects these changing sentiments and preferences, profits decline. Business leaders course correct by cutting costs—inventory and labor. This induces a general slowdown in economic activity—a recession. This is the GOAL of Chairman Powell and the Federal Reserve in their policy to combat inflation.

Investors are wise to take advantage of the rise in asset prices in the fourth quarter and rebalance their portfolios. Here at Concord Asset Management, we are evaluating client portfolio models and investment options to prepare advisors and their clients for what may be another tough year in 2023. With inflation at 7.1% (Nov 2022) vs 7.0% a year ago (Dec 2021), the Fed seems to have sufficient reason, runway, and resolve to continue raising interest rates. Even a reopening of China does not appear to have uniquely positive characteristics for investors in the upcoming year. The Ukraine/Russia stalemate portends dark times for Europe.

Still, the stock and bond markets provide opportunities for investors who are risk-aware and have a solid financial plan. Meeting with your advisor to discuss your personal situation enables you to establish an appropriate risk tolerance for short-term market volatility. We look forward to having some dry powder available for when that volatility presents opportunities in 2023.

Author

Gary Aiken, Chief Investment Officer

Gary Aiken is the Chief Investment Officer for Concord Asset Management and is responsible for macroeconomic analysis, asset allocation, and security selection as well as trading and investment operations.

Gary has over 21 years of investment experience and holds an undergraduate degree in economics from the University of Maryland and an MBA from The George Washington University School of Business.

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Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel, with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

Please Note: If you are an IA Firm client, please remember to contact IA Firm, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. IA Firm shall continue to rely on the accuracy of the information that you have provided.

Please Note: If you are an IA Firm client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Q3 2022 Report: Patience Not Pessimism

Patience Not Pessimism

Key Observations

Inflation is proving more stubborn than anticipated, with the Fed getting increasingly hawkish and markets becoming more skeptical of a “soft landing.”
A steady decline in asset values so far this year (i.e., a collapse in growth stocks and a correction in bond prices) has created attractive valuations in many asset classes.
Higher interest rates are having mixed impacts on the economy (e.g., the housing market has cooled significantly, but savers are now able to actually earn an attractive return on their savings).

Click to download this report

Economic Commentary

At the end of the third quarter, inflation was still the hot topic on everyone’s mind, especially after the Federal Reserve’s decision in September to implement a third consecutive rate hike of 75 basis points. Inflation ticked up in August after declining in July and stubbornly remained above 8% on an annualized basis, despite gasoline prices continuing to fall steadily since the end of June.¹

The Fed is determined to get a grip on inflation and is bound to do so eventually. As Fed Chair Jerome Powell said after the group’s September meeting, they will “keep at it until the job is done.” Fed officials see rate hikes continuing into 2023, not exceeding a “terminal rate” of 4.6%, with the goal of pulling inflation back down to 2% by 2025.²

Markets now understand that the Fed’s mission, which includes a pull-back on asset purchases, will come with a short-term cost and potentially some economic pain. At a news conference in September, Powell was explicit, “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t.” So the question becomes: how painful will it be? No one knows.

Here at CAM, we have been setting expectations for some time that the U.S. will not likely see a V-shaped recovery after any potential recession (i.e., a rapid recovery, nearly to pre-recession levels). But how deep any recession may be—and how long it lasts—will likely depend on how quickly the Fed can end its tightening policies.

This challenging economy is still somewhat of a unicorn, continuing to show many signs of strength.

Typically an economic slowdown is accompanied by rising unemployment, but today’s job market remains competitive. As inflation burned hot in August, payrolls continued to expand, with non-farm jobs expanding by 315,000. Unemployment remained below 4%, labor force participation gained, and wages rose. The chief investment strategist at Charles Schwab told CNBC, “This could very likely be a recession where you don’t see the kind of carnage in the labor market that you see in most recessions.”³

Businesses have continued to invest, with capital goods expenditures reaching a seven-month high in August, according to the U.S. Commerce Department⁴ — another potential argument against a deep recession.

Source: Seegrid Corporation

Furthermore, some of our current economic pain and price inflation can still be chalked up to the “bullwhip” effect of mismatches in supply and demand. COVID disruptions to the supply chain have yet to unwind fully, while consumer demand snapped back more quickly than expected and then slowed toward the end of summer. Such mismatches continue to roil the economy.

Ford announced last month that it has more than 40,000 pick-up trucks it can’t finish building for lack of parts.⁵ Consumer appliance maker Whirlpool is experiencing component shortages.^6,7 Natural gas is in short supply heading into the winter season, not just because of the war in Ukraine but also because electricity providers had to draw down gas reserves to meet surging demand during an unusually hot summer.⁸ Supply shortages, bad weather, war, labor shortages, and high consumer demand are squeezing the markets for everything from tires⁹, to frozen vegetables¹⁰, to Halloween candy¹¹ and Christmas trees.¹²

At the same time, some sectors of the economy definitely are showing signs of weakness.

Retailers are finding themselves with too much inventory of the things they can get as consumer spending has slowed. Amazon recently announced its second Prime Day-type sale for 2022, when it normally has only one such event per year. Walmart and Target are planning an early start to their holiday shopping sales. Such efforts, using discounts to reduce inventories, could help bring down prices over the remainder of the year.¹³ Overstocked inventories are also causing a ripple effect through the transportation industry, with global shipping beginning to slow as well.¹⁴

While rent remains high, the market for home purchases has finally begun to soften. Price increases are slowing, home sales dipped half a percent in August¹⁵, and the senior economist for Realtor.com recently said that “the upward momentum has lost steam, and it is clear that the market peak is now firmly behind us.”¹⁶

So, when you add it all up, it would be an understatement to say that economic signals are mixed. The Fed’s war on inflation may slow the economy and cause a marginal increase in unemployment, perhaps even a recession. However, many parts of the economy will only be slowing from a white-hot level that we believe is objectively unsustainable, and supply issues will eventually slowly sort themselves out. In sum, we’d argue it’s a time for patience and caution, not pessimism.

Market Commentary

The thing to remember about securities markets is that assets are priced on a forward-looking basis. Essentially, prices reflect future events and earnings, not current ones.

As such, market retrenchment during the third quarter was likely driven by investors finally coming to terms with the fact that the Fed will not let up any time soon on its inflation fight. Rates will continue to rise, and some sort of recession is more likely than not.

Moreover, economic forecasts for the U.S. have come down from 1.7% annual GDP growth to just about zero this year (0.2%) and less than 2% annually through 2025.¹⁷

So, even though stocks recovered from July through mid-August, they pulled back again through the end of September as a “soft landing” scenario became less and less likely. The S&P 500 peaked on August 16 at just over 4,300 and with the exception of a brief rally in mid-September, slid steadily through the quarter end, even flirting with bear market territory. The S&P 500 is off about 23% from its high in Q4 2021.

The DOW showed a similar pattern, peaking on August 16 and then sliding into bear territory on September 23, with the DOW currently off about 15% from its high in Q4 2021. The biggest losses by far, however, have been seen in the tech-heavy, growth-oriented NASDAQ, which peaked on August 15 and approached bear territory by the end of September. The NASDAQ is down about 32% from its peak in November 2021, as high inflation tends to take a bigger toll on growth stocks compared to other sectors of equity markets.

Source: BlackRock Fundamental Equities, with data from Bloomberg and the National Bureau of Economic Research (NBER)

Bond investors are also feeling the pain in 2022, with longer-term issues (10+ years) getting hit hardest in the third quarter since they are most sensitive to changes in interest rates. According to Morningstar, every one of its taxable bond categories is in the red for 2022, through mid-September. The least-impacted sector of fixed income has been ultra-short bank funds and high-yield has held up better than most, only down about 10% as of mid-September.¹⁸

The bright spot in all this negative news is that price-earnings ratios for stocks—especially growth stocks—are at some of their most attractive levels in years. In the case of a shallow recession, equities may be positioned for a strong bounce. Bond yields, which tend to overshoot in both a positive and negative direction, may now also offer significant value as the Fed’s rate hike regime approaches its finale, likely in the early part of next year.

Final Thoughts

In principle, we believe that long-term investors should remain invested across market cycles and that trying to time the ups and downs of market cycles is a fool’s errand.

This time around, the Fed has embarked on an important task. While we don’t want to underestimate the challenges of a recession, like many investors we believe that the perils of high inflation are worse. Remember that those of us under the legal retirement age have never lived through a prolonged period of high inflation. We have never seen firsthand the destruction of it. Also, remember that while inflation is high in the U.S., relative to recent history, it remains higher around the world.

We believe that the U.S. will come out of this difficult period with a stronger economy and more rational valuations across a wide range of asset classes. This may set the stage for strong investment returns:

The average S&P 500 return in the 12 months following an inflation crest was 11.5%.¹⁹
The average 12-month [equity] return immediately following a 15% or greater decline is 55%.²⁰
Bear markets average 14 months in length with an average return of -33%, a relatively short time compared to bull markets that average 71 months and an average total return of 263%.²⁰

Source: CNBC

Rather than seeing this as a time for pessimism, we see it as a time for cautious opportunism, particularly around financial planning work. For example, with interest rates on CDs creeping toward 4%²¹, one can finally earn an attractive return on savings. Many Americans have hesitated to even save an emergency fund given the dearth of return on savings, but now may be the time to reassess one’s allocation to cash savings, which is likely an under-invested portion of their financial plan.

Now may also be a good time for tax planning, such as exiting legacy positions that may have been difficult to liquidate when asset values were higher. Given where asset values are today, there may be an attractive opportunity to execute any pending Roth IRA conversion.

In short, we believe in staying on the long-term course. Investors are experiencing the end of the longest bull run in American history. Markets have been and will likely remain choppy. Growth is expected to be tepid. We may see a recession. Global supply issues may take longer than we’d like to work themselves out.

Recessions and market corrections are the anomalies. Recoveries, however, often happen faster than anyone expects, so steadiness and patience are key to riding out any coming storm.

About Concord Asset Management

Concord Wealth Partners built Concord Asset Management (CAM) to bring institutional quality service to their clients and financial advisors.

CAM’s service goes beyond simply providing institutional quality investment management; our team brings deep industry knowledge, proprietary research, investment due diligence, and real-time market analysis to help clients and advisors make better and more informed decisions about their financial future.

Our core belief is that clients should always be put first and that everyone’s financial goals are unique; that means their investment strategy should be too.

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Footnotes and Sources

¹Goodkind, Nicole. “The Fed Is Fighting Inflation. Could Deflation Be Its next Battle?” CNN Business, Cable News Network, 13 Sept. 2022, https://www.cnn.com/2022/09/13/investing/premarket-stocks-trading/index.

²Cox, Jeff. “Fed Raises Rates by Another Three-Quarters of a Percentage Point, Pledges More Hikes to Fight Inflation.” CNBC, CNBC LLC, 21 Sept. 2022, https://www.cnbc.com/2022/09/21/fed-rate-hike-september-2022-.html.

³Cox, Jeff. “Payrolls Rose 315,000 in August as Companies Keep Hiring.” CNBC, CNBC LLC, 2 Sept. 2022, https://www.cnbc.com/2022/09/02/august-2022-jobs-report-.html.

⁴Mutikani, Lucia. “U.S. Core Capital Goods Orders Surge; Consumer Confidence Rises Further.” Reuters, Reuters, 27 Sept. 2022, https://www.reuters.com/markets/us/us-core-capital-goods-orders-surge-august-2022-09-27.

⁵Isidore, Chris. “As Many as 45,000 Fords Can’t Be Sold Because They’re Missing Parts.” CNN Business, Cable News Network, 20 Sept. 2022, https://www.cnn.com/2022/09/20/business/ford-supply-chain-problems/index.

⁶Trentmann, Nina. “Whirlpool CFO Faces Higher Costs as Component Shortages Force Production Line Shifts.” The Wall Street Journal, Dow Jones & Company, Inc., 21 Apr. 2021, https://www.wsj.com/articles/whirlpool-cfo-faces-higher-costs-as-component-shortages-force-production-line-shifts-11619047554.

⁷Campbell, Callum. “3 Supply Chain Challenges Impacting Retail in 2022.” Supply & Demand Chain Executive, AC Business Media, LLC., 5 Apr. 2022, https://www.sdcexec.com/warehousing/retail/article/22159155/linnworks-3-supply-chain-challenges-impacting-retail-in-2022.

⁸Zizka, Tom. “Tight Natural Gas Supplies Will Mean Higher Heating Bills, When the Weather Turns Cold.” FOX26 Houston, FOX Television Stations, 26 Sept. 2022, https://www.fox26houston.com/news/tight-natural-gas-supplies-will-mean-higher-heating-bills-when-the-weather-turns-cold.

⁹Winer, Madeleine. “Tire Supply Chains Are ‘Anything But Normal’ And They Won’t Be For A While.” TireReview, Babcox Media Inc., 23 June 2022, https://www.tirereview.com/tire-supply-chain-disruption-2022.

¹⁰Future Market Insights, Inc. “Freeze Dried Vegetables Market to Top US$ 194.2 Billion by 2032 as Demand for Products with Longer Shelf Life and High Nutritional Content Surges.” Yahoo Finance, Yahoo, 24 Aug. 2022, https://finance.yahoo.com/news/freeze-dried-vegetables-market-top-154300646.html.

¹¹ViaVid. “The Hershey Company Second Quarter 2022 Earnings Results Prepared Remarks.” ViaVid Communications Inc., 27 July 2022.

¹²Van Buskirk, Chris. “Could the Drought Steal Christmas? From Tree Farms to Apple Growers, ‘It’s Just Brutal’ as Scorching Heat Waves Add to Problem.” Mass Live, Advance Local Media LLC, 14 Aug. 2022, https://www.masslive.com/weather/2022/08/could-the-drought-steal-christmas-from-tree-farms-to-apple-growers-its-just-brutal-as-scorching-heat-waves-add-to-problem.html.

¹³Martín, Hugo. “A Second Prime Sale Shows Amazon Is Nervous about the Economy Too.” Los Angeles Times, Los Angeles Times, 26 Sept. 2022, https://www.latimes.com/business/story/2022-09-26/a-second-prime-sale-shows-amazon-is-nervous-about-the-economy-too.

¹⁴Murray, Brendan. “Container Ships Cancel Voyages From Asia as Demand Softens.” Bloomberg, Bloomberg L.P., 26 Sept. 2022, https://www.bloomberg.com/news/newsletters/2022-09-26/supply-chains-latest-container-ships-cancel-voyages-amid-weak-demand.

¹⁵Veiga, Alex. “US Home Sales Slipped, Prices Grew More Slowly in August.” AP News, The Associated Press, 21 Sept. 2022, https://apnews.com/article/home-sales-mortgages-mortgage-rates-0210b7efc503b8c601c756d60ba0a07f.

¹⁶Bahney, Anna. “US Home Price Reports Show the Cooling Effect of Rising Mortgage Rates.” CNN Business, Cable News Network, 27 Sept. 2022, https://www.cnn.com/2022/09/27/homes/case-shiller-july-2022/index.

¹⁷Rugaber, Christopher. “Jerome Powell Has a Tough Message for Investors: Tighten Your Seatbelts, Because Recession and Unemployment Are Coming.” Fortune, Fortune Media IP Limited, 22 Sept. 2022, https://fortune.com/2022/09/22/jerome-powell-message-investors-recession-unemployment-soft-landing.

¹⁸Lynch, Katherine. “Why 2022 Has Been Such a Terrible Year for Bond Funds.” Morningstar, Morningstar, Inc, 25 Sept. 2022, https://www.morningstar.com/articles/1114969/why-2022-has-been-such-a-terrible-year-for-bond-funds.

¹⁹DeSpirito, Tony. “Taking Stock: Q4 2022 Equity Market Outlook.” BlackRock, BlackRock, Inc., 22 Sept. 2022, https://www.blackrock.com/us/individual/insights/taking-stock-quarterly-outlook.

²⁰Capital Group™. “Correction or Bear? 6 Charts That Explain Market Declines.” Capital Group, Feb. 2019, https://www.capitalgroup.com/advisor/ca/en/insights/content/articles/6-charts-that-explain-market-declines.html.

²¹Whiteman, Doug. “CD Rates Today: September 28, 2022—Top Rates Pay Up To 3.60%.” Forbes Advisor, Forbes Media LLC, 28 Sept. 2022, https://www.forbes.com/advisor/banking/cds/cd-rates-today-09-28-22.

Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel, with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

Q2 2022 Report: Nothing New Under the Sun

Nothing New Under the Sun

Key Observations

Inflation has hit a 40-year high. We expect “demand destruction” to cause a significant decline in inflation by year-end, but remain elevated above normal levels.
Once behind the curve, the Fed is front-loading large interest rate hikes in order to cool the economy and fight inflation.
Stocks are off to their worst first half of a year since 1970, and bonds their worst start ever, but markets are resilient, and they recover.

Click to download this report

Economic Commentary

As the second quarter ends, the hot topics on everyone’s minds are:

Has inflation peaked, and if not, when will it peak?
What is the Fed doing about it?
Will the Fed drive the economy into a recession? If so, how severe will it be?

We know why we have inflation. It’s the result of unequal supply and demand caused by the pandemic. The combination of a money supply expansion during the Covid-19 lockdown, the release of pent-up demand once the lockdown ended, and supply chain disruptions have sent inflation to a 40-year high.

This year, two new supply constraints arose – the Zero-Covid Policy in China, where many goods are manufactured, and the Ukraine War, creating shortages in energy and food.

The result? According to the U.S. Labor Department, inflation has jumped to 8.6% for the 12-month period that ended in May.¹

So, what can we look forward to? It is likely that supply chain challenges will remain as China and Russia will remain wildcards. However, it’s unlikely that inflation will be this high at the end of the year as the demand side of the equation becomes front and center. Pent-up demand will eventually wane, a natural cure for high prices is high prices, and the Federal Reserve is finally acting with conviction.

The Fed has kicked the wheels of demand destruction into motion. They are front-loading significant interest rate hikes, the latest a 0.75% hike in June. Fed member expectations of future hikes indicate 3.4% by year-end. In addition, the Fed commenced “quantitative tightening” in June – an activity that reduces money supply and slows down the lending activity of banks.

There is evidence that the Fed is starting to get what it wants as higher interest rates on mortgages are taking a toll. Housing starts have fallen off a cliff, declining 14.4% from April to May and -8.6% from a year earlier. New mortgages have plunged an incredible 32% year-over-year as well. The housing market is the first shoe to fall as demand destruction becomes a reality.^2,3

The Fed’s aggressive actions are not without risk. At this point, the Fed’s position has changed from “not moving fast enough to curb inflation” to “moving so fast it will cause a recession.” But this change in perspective just shows how complicated things are. The aggressive, front-loaded interest rate hikes have ironically increased expectations that the Fed will cut rates as soon as 2024. We know from history, that interest rate cuts and loosening of monetary policy lead to robust growth. Expect the recession, if it comes to fruition, to be relatively mild and short-lived.

Market Commentary

With inflation surging to 40-year highs, supply chain issues lingering, and the Fed instituting the largest rate hike in 28 years, the financial markets have plummeted. The S&P 500 and NASDAQ indices have sunk into bear territory, down 21% and 30%, respectively. The Dow (DJIA) keeps flirting with that unfavorable distinction and is currently down 15% through the first two quarters. For the S&P and DJIA, this is the worst start to a year in over 50 years. For the NASDAQ, it is the worst ever.⁴

While bonds should provide a buffer when markets crash, U.S. Treasuries have also delivered double-digit losses to start the year. The 10-year Treasury has lost more than 10%, and declines in longer-term Treasuries exceed 20%. Investment-grade corporate bonds have dropped a staggering 16%, and the Bloomberg US Aggregate Bond Index, tracking all maturities of Treasuries and corporate bonds, is on pace for its worst year in history, currently down over 10%. Unfortunately, this means the usually reliable balanced portfolio of 50% stocks and 50% bonds has declined more than 14% to start the year.^4,5

Final Thoughts

The constant barrage of pessimism, lingering inflation, and recession talk from financial news organizations has everyone scared and gloomy. Still, it’s important to reflect on the past 25 years. We’ve seen dramatic conditions in the economy and markets before, so there is truly nothing new under the sun.

In the late 1990s, Russia defaulted on its debt. Then came the bursting of the Dot-Com Bubble, followed by 9/11. Soon after, a downgrade of U.S. debt, a housing market crash, and the bankruptcy of Wall Street bastion Lehman Brothers led to the Great Recession. And, most recently, a global pandemic shut down the global economy for months.

During those tumultuous periods, many people thought they knew what was happening and sold stocks or stopped putting money into the markets. However, one common theme has continually persevered – markets are resilient. Back in 1997, knowing all the pending economic and market calamities, would anyone have guessed the S&P 500 would generate an average annual of nearly 10% and a cumulative return of more than 900% over the next 25 years?⁶

In conclusion, there’s nothing new here; we’ve seen this before. Markets are resilient, and they recover. With so much risk currently priced into the markets, there is opportunity. Forward-looking stock valuations have declined dramatically, and yields on bonds are at multi-year highs. Despite an unbelievable lineup of bad news, if you have a long-term focus, you need to look past these things, even if it’s painful.

Times like these remind us how important it is to consult with your advisor to make sure your portfolio is aligned with your risk tolerance and time horizon. It’s this valuable partnership between the Client, Advisor, and CAM that will help guide you through these uncertain times by making prudent decisions and avoiding costly mistakes.

Author

Mitch York
CIO
Concord Asset Management

—

Footnotes and Sources

¹Current US Inflation Rates: 2000-2022, US Inflation Calculator, June 10, 2022

²Troy Green, “Existing-Home Sales Fell 3.4% in May; Median Sales Price Surpasses $400,000 for the First Time,” National Association of REALTORS®, June 21, 2022.

³Mika Pangilinan, “Mortgage Applications Inch Higher in Weekly Survey,” Key Media, Inc, June 29, 2022.

⁴Morningstar, June 2022.

⁵Bloomberg US Agg Total Return Value Unhedged USD, Bloomberg, June 23, 2022.

⁶Information based on a portfolio of 50% Bloomberg US Aggregate Bond Index, 40% S&P 500 Index, and 10% MSCI EAFE Index.

Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel, with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

Q1 2022 Report: Goodbye and Good Riddance

Goodbye and Good Riddance

Key Observations

After a brief flight to quality following Russia’s invasion of Ukraine, U.S. interest rates jumped to three-year highs as inflation fears prevailed.
The Federal Reserve approved its first interest rate hike in more than three years and indicated many more to come.
Stocks declined sharply during the first 10 weeks of the year but rallied at the end of March to erase half the losses.

Click to download this report

Economic Commentary

The first quarter wasn’t pretty so let’s say goodbye and good riddance. Like a Clint Eastwood film, this quarter featured the good, the bad, and the ugly.

The good is a strong economy coming back from Coronavirus constraints with very low unemployment and robust demand from households flush with money to spend. The bad is continuing supply chain constraints. And the ugly is the Russian invasion of Ukraine.

The impact of the war isn’t limited to Europe. It’s affecting wheat, fertilizer, and energy supplies, raising prices around the globe. Even before the invasion, all eyes were on inflation, which hit 7.9% for the 12 months ended in February. It’s the highest rate in 40 years and the dominant economic concern. Nearly all other metrics are being viewed through the lens of inflation.¹

We thought inflation had plateaued as supply chain constraints started to ease earlier this year. However, the Russian invasion added another layer to supply chain struggles and confirmed to investors the real risk to the U.S. economy is inflation.

Source: Bloomberg

Take fertilizer for example. Even before the Russians rolled into Ukraine the world was verging on “the worst fertilizer situation in modern history in terms of supply,” Peter Zeihan, a geopolitical analyst and author, told FOX Business. “All three source materials that go into fertilizer (phosphate, nitrogen, potash) are subject to an abject shortage. Even if the war were to stop tomorrow, it’s already too late. It’s too late for the planting season for the Northern Hemisphere this year.” It is possible, if not likely, food prices could rise even further.²

Russia also provides about 30% of the global supply of palladium. This metal used to produce catalytic converters for autos has seen its price rise by 80%. It will now lift the already rising prices of cars. Of course, there are the sanctions on Russian oil. No need to explain this impact as we are all aware of the pain at the pump.³

All of this has the Federal Reserve’s attention. It’s no surprise that soon after raising rates 25 basis points in March, Fed Chair Jerome Powell said the Fed might hike its benchmark short-term interest rate faster than expected if inflation continues to surge. All eyes are now on half percent hikes at the next few meetings.⁴

If there is a recession, it won’t be started by a banking crisis or declining home values. It will be driven by inflation and rising interest rates. In February the Bureau of Labor Statistics reported average hourly wages increased by 5.3%. However, adjusted for inflation, hourly earnings declined by 2.6%.⁵ No wonder consumers are feeling the blues. The University of Michigan Consumer Sentiment Survey hit 11-year lows on the back of surging prices.⁶

And for more ugly news, the yield curve has started to invert. That means shorter-term interest rates are higher than longer-term interest rates. That is often a precursor to recession. And this time it may be different as investors are concerned the Fed’s late start to raising rates could lead to stagflation, a word not heard since the 1970s. Stagflation is a combination of rising prices and declining economic growth.

Market Commentary

After New Year’s Day, the market indexes hit all-time highs, then began a steady decline. The shock of the Russian invasion and surging inflation expectations pushed the Dow Jones Industrial Average and the S&P 500 Index into correction territory, a more than 10% drop from their highs. The Nasdaq posted a decline of more than 20%, which is considered a bear market.

Uncertainty causes investors to pull back and lower their exposure to stocks and other risky assets. Geopolitical risk only adds to the uncertainty. We don’t like it when stocks decline dramatically, but these declines reprice risk in order to increase future expected returns. This is why investors “buy the dip.” Fortunately, dip-buying occurred in late March cutting those staggering equity losses in half.

Typically, bonds become a safe haven when stocks crash, but not this time. The yield on the 2-year Treasury note rose 155 basis points to 2.28% during the first quarter; the largest 3-month increase in 38 years. The 10-year Treasury note advanced 83 basis points to 2.36%. When yield goes up, bond prices go down. According to Bloomberg, the total U.S. bond market lost 5.9% during the first quarter. Long and intermediate-term U.S. Government bonds declined 10.6% and 5.4% respectively. Investment-grade corporate bonds also performed miserably, down an incredible 8.4%.⁷

The bond market is reacting to expectations of inflation and what the Fed will do. Meanwhile, the stock market is reacting to the bond market, interest rates, the risks of rising inflation, stagflation, geopolitical uncertainty, and the volatile commodities market.

Final Thoughts

The financial markets have started the year on a roller coaster ride. Bonds have sold off sharply and the yield curve has started to invert. Stocks entered correction and even bear market territory only to surge back at the end of Q1. The typically reliable 50/50 stock & bond portfolio declined more than 5%. The wall of worry I often refer to is looking ominous at the moment, so let’s put this in perspective and discuss a prudent course of action.

We don’t know if the Fed’s actions will lead to recession. With interest rates starting at 0%, even if the Fed hikes rates to 2.5%, that’s will still be historically low. While higher rates could slow economic growth, households have a lot of money and want to spend it. This might prevent an economic contraction, at least for now.

An inverted yield curve could indicate a recession is in the cards. Since 1900, the yield curve has inverted 28 times, and about 75% of the time a recession has followed. However, it is worth noting the average lag from inversion to recession was 22 months. The lag time over the last six recessions ranged from 6 months to 3 years. To add even more complexity, stocks tend to perform well in the months following an inverted yield curve.

Source: Truist Advisory Services

What we do know is being out of the market can be very costly. According to Dimensional Fund Advisors, from 1990 to 2020, an investment of $1,000 in U.S. stocks would have grown to $20,400. During that 30-year time period, missing out on the best 25 stock market days would have reduced that amount to $4,400.

It’s important for investors to keep a long-term perspective. There are always reasons to sell stocks, but timing the market is difficult. You have to get it right twice – getting out and getting back in. At Concord Asset Management we have that long-term perspective. Instead of bailing on stocks, we have changed stock allocations by reducing clients’ exposure to growth stocks that are more sensitive to rising interest rates for less sensitive stocks.

In addition, earlier this year we lowered interest rate risk for clients in moderate-risk and conservative portfolios by increasing the allocation to funds that invest in floating-rate securities and reducing the allocation to longer-term, traditional bond funds that perform poorly when rates rise. Some clients still have exposure to U.S. Government bonds. If the war in Ukraine spreads, or other significant unforeseen events transpire, there will be a flight to quality, and you will be thankful you own Treasuries.

Lastly, times like these remind us how important it is to consult with your Advisor to make sure your portfolio is aligned with your risk tolerance. It is this valuable partnership between the Client, Advisor, and CAM that will help guide you through these uncertain times by making prudent decisions and avoiding costly mistakes.

Author

Mitch York
CIO
Concord Asset Management

—

Footnotes and Sources

¹US Inflation Calculator, March 15, 2022

²FOX Business, March 10, 2022

³Reuters, March 7, 2022

⁴PBS NewsHour, March 21, 2022

⁵U.S. Bureau of Labor Statistics, March 10, 2022

⁶Reuters, March 11, 2022

⁷MarketWatch, March 31, 2022

Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel, with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

November 2021 Insights

Key Observations:

A more hawkish Federal Reserve has emerged and no longer views inflation as transitory
The yield curve is flattening as the market is pricing in rate hikes, but strong demand persists for longer-term Treasury bonds
Economically sensitive stocks sold off in November as the Omicron variant and inflation concerns raised doubts about the sustainability of the U.S. economic recovery

Economic Commentary

Let’s start with some good news. The U.S. Bureau of Labor Statistics reported the unemployment rate dropped to a pandemic low of 4.2% in November. Other encouraging data from the nonfarm payroll includes an increase in labor force participation rate to 61.8%, also a pandemic high. Unemployment is down as more people are wanting a job and finding it. As for the bad news, nonfarm payrolls only increased by 210,000 in November, dramatically below expectations of 573,000. This deceleration is a concern and has increased uncertainty in labor market momentum. It appears this is a hiccup caused mainly by the deceleration of hiring in labor and leisure in COVID impacted geographies. (1)

A greater concern is elevated inflation and its potential impact on households, as clearly displayed in the University of Michigan’s Surveys of Consumers for November. (3) The Consumer Sentiment Index declined 6.0% in November and 12.4% from the prior year to its lowest level in 10 years. Consumer’s assessment of current economic conditions dropped a staggering 5.3% from the prior month and a staggering 15.4% year-over-year. As noted in the survey release, “the decline was due to a combination of rapidly escalating inflation combined with the absence of federal policies that would effectively redress the inflationary damage to household budgets.” The survey presents a real risk to economic growth. If fears of declining real income override the historically high level of cash on hand households are currently enjoying, consumers are likely to cut back on spending and curtail economic growth in the months to come.

The Federal Reserve has certainly taken notice and changed its tune. Just a month after the Fed stated, “inflation is elevated, largely reflecting factors that are expected to be transitory,” Federal Reserve chief Powell stated in testimony to the U.S. Banking Committee, “I think it’s probably a good time to retire that word.” (2) To amplify the Fed’s right turn on inflation, the Fed Chair indicated a more hawkish tone as he expressed it is, “appropriate in my view to consider wrapping up the taper of our asset purchases.”

Market Commentary

The bond market certainly took Powell at his word (4). Anticipating an acceleration in tapering and expedited rate hikes, short-term rates jumped, longer-term rates declined, and the spread between two-year and ten-year Treasury bonds dropped by approximately 0.25% in just a few days. At 0.75%, the spread is at a one-year low. This “flattening” of the yield curve is due to investors betting earlier rate hikes will damper future inflation. In addition, there is still a demand for longer-term Treasuries as a flight to quality trade has picked up due to the uncertainty of the Omicron variant.

Speaking of Omicron, the variant emerged as a significant concern in late November, and its impact on the market was swift and noticeable. Economically sensitive stocks sold off sharply, led primarily by financials and energy, down 6.2% and 5.3% for the month. Broadly, the Dow declined 3.5%, the S&P 500 lost nearly 1%, and the NASDAQ was flat. Foreign and emerging market equities were hit particularly hard as expectations of significant governmental restrictions weighed on their stock markets. As measured by the MSCI EAFE Index, developed foreign markets lost 4.6% in November, and emerging markets dropped 4.3%.

Final Thoughts

The Omicron variant certainly caused short-term volatility and a November sell-off in stocks. However, as more data comes to light, it appears this variant is not the threat as once feared. It is the emergence of a more hawkish Federal Reserve that has embedded a new level of uncertainty into the stock and bond markets. The Fed is walking a tightrope. Stock valuations are high, and an overly aggressive Fed risks choking economic growth to the extent that it does not support these valuations. A Federal Reserve that does not accelerate tapering and rate hikes encourages sustained high inflation. This will reduce real GDP and dampen consumer spending as households adjust to their new real incomes. Again, bad news for stocks and not good news for bonds either.

As this more hawkish Fed reveals its plan for tapering and rate hikes, a clearer picture of future interest rates will emerge.

At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.

Author

Mitch York

CIO

Concord Asset Management

Sources:

All performance data is generated through Morningstar.

You cannot invest directly in an index. A description of each comparative benchmark/index is available upon request.

Disclaimer: Concord Asset Management, LLC (“CAM” or “IA Firm”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel, with Concord Wealth Partners. CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

All data is as of the end of April 2021 unless otherwise noted. Data sources include www.morningstar.com. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. IA Firm is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of IA Firm’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/. Please Note: If you are an IA Firm client, please remember to contact IA Firm, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. IA Firm shall continue to rely on the accuracy of the information that you have provided. Please Note: IF you are an IA Firm client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Enduring a choppy stock market

Don’t be a greedy chicken

There’s no doubt that big drops in equity indexes make headlines. They are often phrased to be sensational: “Biggest weekly decline in 2 years”, or “worst day since May,” or “Stocks fall for a third straight session.” Declines in stock indexes happen because of concerns, worries, and fears over one thing or another, which cause equities to tank, plunge, slide, retreat, or even crash. You can almost hear the exclamation points, even if the headline writers don’t include them!

But a wise investor will keep his or her composure in the face of such headlines – including the headlines we have been seeing since the S&P 500 dropped more than 5% from its all-time high back in early September 2021. While volatility may be up recently, volatility is a feature of stock markets, and it has been more muted over the past few years than it has been historically.

So, anticipating more sensational headlines about choppiness in stock markets, here are a few things to keep in mind:

First, pullbacks are common, even “large” ones, and today’s market has seen fewer such pullbacks than is typical. When the S&P 500 dropped 5% from its all-time high in September, it had gone 227 days without a drop of that magnitude, the “seventh longest such streak on record,” according to Barron’s. Moreover, stock market pullbacks of 10% or more have happened in about 50% of the years since 2000. So even if the headlines make it seem like significant drops are remarkable, they are not.

Second, pullbacks that make headlines are often measured in relation to an all-time high, which means that investors have been making money all the way up. During that 227 days between the last 5% pullback and the most recent one in September 2021, the S&P 500 index had gained 29.4%.

Third, pullbacks are typically followed by a rebound. That means if you liquidate your stocks after a pullback, you lose the opportunity to benefit from any recovery. By far, the most common “large” declines in the S&P 500 are between 5% and 20%, and those are typically fully recovered in four months or less.

I have a term for investors who want all the return of stocks but don’t want any of the volatility or drawdown risk. I call them “greedy chickens.” Volatility is an embedded feature of the stock market; you cannot avoid it, and it’s the main reason you earn a return on your equity investments. Short-term sell offs happen periodically, and that’s what drives long-term return because risk and return are related. Don’t run from it. Embrace it and let it work for you.

We believe that investors should listen to their financial advisors, who should have a long-term strategic plan in place for investors’ portfolios. It may be wise at this point to have cash on the sidelines as a reserve to put more money to work when stocks are one sale. And try to maintain a long-term perspective, of 5-10 years or longer, when it comes to investing in stocks. For those with lower risk tolerance, or high-income needs, a balanced portfolio of stocks and bonds may reduce equity risk to a tolerable level.

But all investors need to remember that when stock markets get choppy, it’s easy to get angsty over potential drawdowns in the equity portion of the portfolio. We haven’t seen significant equity drawdowns for quite a while. And there are certainly difficulties on the horizon. Economic growth may falter. Politics may prove difficult. The delta variant may continue to cause problems. Corporate earnings may have topped out for the moment.

But any short-term declines in equities may very well present excellent long-term buying opportunities if you’re not a greedy chicken.

Author

Mitch York, CFA®

CIO

Concord Asset Management

———————————-

Disclaimer: Concord Asset Management (“CAM”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where CAM and its representatives are properly licensed or exempt from licensure.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Concord Wealth Partners, LLC (“IA Firm”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from IA Firm. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. IA Firm is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of IA Firm’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/. Please Note: If you are an IA Firm client, please remember to contact IA Firm, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. IA Firm shall continue to rely on the accuracy of the information that you have provided. Please Note: IF you are an IA Firm client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. You cannot invest directly in an index. Stock markets, and many individual equities, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

The price of bitcoin and other digital currencies has fluctuated unpredictably and drastically. You could experience significant and rapid losses. Profits or losses from investing in bitcoin are virtually impossible to predict. Platforms that buy and sell bitcoins may be unregulated, can be hacked, may stop operating, and some have failed. Unlike banking institutions that can provide FDIC insurance, there are no such safeguards provided to digital wallets. Bitcoin payments are irreversible. Once you complete a transaction, it cannot be reversed. Reversing a transaction depends solely on the willingness of the recipient to do so.

October 2021 Insights

Key Observations:

The Delta variant, supply chain constraints, and consumer sentiment bit into Q3 economic growth
The Federal Reserve announced plans to reduce its monthly purchases of Treasury and mortgage-backed bonds
Interest rates are still range-bound, offering low yields across the spectrum of traditional fixed income

Economic Commentary

It has been a mixed bag of economic news recently. The Labor Department reported the unemployment rate hit a new pandemic low of 4.8% at the end of Q3. That’s good news. The bad news is much of the decline in unemployment was due to workers dropping out of the labor force. (1) With the holidays fast approaching, this presents other economic challenges. The Labor Department noted that employers face their own issues persuading employees to come back in preparation for a busy holiday season. Employers are dealing with the lowest rate of American adults, 62%, that are either working or looking to work while experiencing a rising Q3 employment-cost index of 1.3% from the prior quarter, the fastest pace since 2001.

We are all very aware of the supply chain issues contributing to product shortages and significant inflation. This has consumers worried. The University of Michigan’s October survey declined 1.5% as consumers feel the most uncertainty about the year-ahead inflation rate than any time in nearly 40 years. (2) This, combined with the spread of the Delta variant, resulted in consumers slowing down. According to the U.S. Department of Commerce, consumer spending grew by only 0.6% in September and was the significant factor in third-quarter GDP coming in at 2.0%, far below the 2.6% estimate. (3)

Back to good news. The Fed doesn’t seem overly concerned about these economic headwinds. In the most recent FOMC statement, the Fed stated, “with progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen.” (4). They continue to believe inflation is “elevated, largely reflecting factors that are expected to be transitory.” Their optimism has been put into action. As expected, the Fed will immediately begin to slow down its pace of monthly purchases of Treasury and mortgage-backed securities, a.k.a. “tapering,” by $10 and $5 billion, respectively. This pace of reduction into the foreseeable future as market conditions warrant.

What makes tapering so important? By incrementally decreasing the monthly purchase of bonds until the program is ended altogether, the Fed methodically reduces the growth in money supply (i.e., monetary stimulus). It not only signals an economy that is moving towards the Fed’s goals of full employment and stable prices, but it provides a potential timeline for future rate hikes (following the end of tapering).

Market Commentary

Let’s focus on bonds for a change. The Fed is now tapering, and real-life inflation is all around us. You would expect the bond market to be in a free fall and interest rates skyrocketing. Not so. The 10-year Treasury bond is yielding 1.55%, well below the recent April peak of 1.75% and far below pre-pandemic levels. Two years ago, the 10-year yielded about 1.90%, and the year before that, it hovered near or above 3% for several months. That’s remarkable considering inflation expectations are now historically high, the Fed has commenced tapering, and a series of small rate hikes are likely to begin late in 2022.

It’s not just U.S. Treasury yields that are low. Government mortgage-backed bonds are paying about 2.5% and investment-grade corporates 2.4%. One could take significantly more risk and buy junk bonds. They yield about 4.4%. That’s not exciting as they averaged an 8% yield over the past 20 years, and they have drawdowns that rival stocks. During the financial crisis of 2008, junk bonds, as measured by the Bloomberg High Yield Very Liquid Index, declined as much as 38%. During last year’s Covid crash, junk bonds declined by nearly 22%.

Final Thoughts

Don’t fight the Fed is an old investment mantra that advises investors to align their decisions with the actions of the Federal Reserve. That’s good advice, but the challenge has always been timing. When do you align your investment decisions knowing there is a lag between signaling, implementing, and finally real market consequences?

At CAM, we suggest now is the time to begin adjusting fixed-income allocations to the reality of the Federal Reserve’s intentions. We expect that interest rates, short and long-term, will methodically increase over the next year or two, and credit spreads will remain in a narrow range. Therefore, capital gains that prevail from falling rates and tightening credit spreads are less likely to lift fixed income returns.

In this environment, looking beyond traditional fixed-income allocations is warranted. For our portfolios, the addition of a multi-asset class income approach including higher-yielding, adjustable-rate debt, and risk-managed, income-generating alternative securities is on the horizon.

Author

Mitch York

CIO

Concord Asset Management

Sources:

All performance data is generated through Morningstar.

You cannot invest directly in an index. A description of each comparative benchmark/index is available upon request.

September 2021 Insights

Key Observations:

Equities experienced their first monthly losses since January with broad, deep declines.
New supply chain challenges come front and center as a major headwind.
Market pullbacks of 5% and greater are more common than you think.

A September to Forget

September has historically been the worst month of the year for equities, and it certainly lived up that reputation this year. Stocks finally sold off after seven consecutive months of positive returns. The Dow Jones, S&P 500, and NASDAQ 100 indices declined 4.2%, 4.7%, and 5.7%, respectively. The selloff was broad with few bright spots. According to Morningstar, 10 of the 11 economic sectors declined for the month. The lone bright spot was energy, up 9.8%. From large growth to small value, every asset class declined in September. How about foreign stocks? After trailing the performance of U.S. stock for eight straight months, developed market equities outperformed U.S. stocks by 1.75% as they declined “only” 2.9% in September. Emerging market stocks were less impressive, losing approximately 4.0%.

Losses were not isolated to the stock market. Bonds fared better but were still down as the Bloomberg US Aggregate Bond Index lost 0.9% in September. On the heels of a modest increase in longer-term yields, long-term Treasury bonds declined 2.9% while short-term bonds were flat. Oddly enough, junk bonds eked out a 0.02% return in what otherwise was a risk off-market. Lastly, precious metals failed to shine as gold dropped 4.0% and silver an incredible 10.5%.

Cause and Effect

What led U.S. stocks to experience their worst month since March of 2020? Most likely, it’s a confluence of several factors. Supply chain issues have come front and center once again. According to Business Insider, Southern California ports are experiencing their greatest ship-backlog on record. (1) As of the end of September, more than 65 enormous container boats were anchored off the Southern California coast while 95 massive cargo ships and another 147 vessels were in port, all records. The consequences include the average wait time for these vessels to unload has increased 40% from 6.2 to 8.7 days, the average time for an ocean freight to go door-to-door has increased 43% (50 days to 72 days), and the costs of shipping containers have risen by some estimates as much as 500%. Why does this matter? Stocks have performed consistently well this year with muted downside volatility because corporate earnings have smashed all expectations. These Southern California ports facilitate nearly 50% of all U.S. imports. Delays in delivering products to market and associated rising costs (and at the worst possible time as inventories need to ramp up for the Christmas season) have tamped down expectations earnings surprises will continue.

There’s more. Inflation pressures are not limited to supply chain issues. Labor remains in high demand and tight supply. We are all feeling the pain at the pump as oil has hit a seven-year high. (2) Inflation expectations are running hot even if bond yields are stubbornly range-bound. As many investors expect a significant increase in bond yields on the horizon, the appetite for high P/E technology stocks has disappeared.

Lastly, there is an even heightened risk to the seemingly endless stimulus from monetary and fiscal policy. Following September’s Federal Open Market Committee meeting, Fed Chairman Powell stated, “While no decisions were made, participants generally viewed that so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate,” (3) Translation, the Fed is going pump the brakes on bond-buying to slow the growth in money supply.

As for fiscal policy, we have all witnessed the calamity in Washington as a once certain infrastructure bill, and its long-term economic impact is in peril. As these additional uncertainties were piled onto a near perfectly priced market, investors took profits and demanded greater expected returns from equities which required a decline in stock prices.

Final Thoughts – A Silver Lining

Yes, there are multiple reasons stocks slid sharply in September. However, it is worth noting profit-taking and the two most impactful headwinds, supply chain backlogs and inflation, are the result of a robust economic recovery led by strong aggregate demand. Recession is not in the cards, so a sustained bear market is highly unlikely. These 5% to 10% selloffs are however common in sustained bull markets. In fact, during the past ten years, the S&P 500 has experienced 18 selloffs of 5% or more during an eight-week period. (4) Taking profits and repricing risks are a normal part of a healthy stock market.

At CAM, we are constantly watching and assessing market conditions. If our long-term outlook changes, we will prudently adjust client portfolios to address our view of these opportunities and risks. Therefore, months like September are a good reminder to review your portfolio with your Advisor to ensure you have a well-diversified portfolio of stocks and bonds that will serve your financial planning needs.

Author

Mitch York

CIO

Concord Asset Management

Sources:

All performance data is generated through Morningstar.

You cannot invest directly in an index. A description of each comparative benchmark/index is available upon request.

Growth Through Innovation – Part 2

Old Dogs, New Tricks: A Deeper Look at Disruptive Innovation.

A few months back, we wrote a piece about today’s age of “disruptive innovation,” which is in the process of reshaping many parts of the global economy. We called it a Fourth Industrial Revolution and outlined how emerging technologies may create new models for success and a whole new crop of winners and losers across various industries.

Here, we take a deeper dive into the topic and outline why some of the leaders of the old economy (old dogs) are leveraging innovation (new tricks) to secure their leadership positions even as their markets see rapid, large-scale change.

TECH REINVENTION: Some of today’s most prominent tech giants are proving that they can be winners at disruptive innovation. Take Hewlett Packard as an example, which has endured several steep selloffs over the years (e.g., 2012) as it struggled to re-define itself and move away from stagnant legacy businesses like ink-jet printing. However, the company’s stock has been a solid outperformer recently, with advancements in 3D printing solutions, open-source artificial intelligence (AI) and machine learning, and virtual reality. One of the granddaddies of the tech world, Microsoft, is another example. The company is rapidly building its cloud computing business, especially its cloud-based gaming platform. It’s also making acquisitions in AI and ambient intelligence tools (e.g., for use in healthcare settings). It acquired a leader in industrial technology innovation and rapid prototyping. And its augmented-reality capabilities recently won Microsoft a bidding war for a $21.9B, 10-year contract with U.S. Army.

INDUSTRIAL REMODEL: Is there any company that more screams “old-school” industrial than a company like John Deere? Well, this company is truly advanced in applying AI, robotics, and connectivity to improve its manufacturing processes (e.g., a neural network technology that can diagnose and fix weld defects in real-time). It’s also using satellite-link technology to improve harvesting and deploying drone technology to provide autonomous crop-dusting.

RETAIL REFASHION: Not to be left behind, retail and service businesses are leading their charge into disruptive innovation. Sports apparel leader Nike uses a range of innovations — like advanced RFID technology, web-based loyalty apps, and predictive analytics — to help optimize inventory, speed up product cycles, and better match consumer demand. Supposedly, stodgy Walmart has been investing for years in supply chain management and automation technology, which powers upgrades to services like rapid in-store pick-up, personal shopping, and even drone delivery. The company is even expanding into consumer finance and money management, as well as autonomous vehicles.

SERVICE OVERHAUL: JP Morgan is in an all-out battle to fend off competition from fintech and Big Tech competitors: for example, it’s partnering with OpenInvest to facilitate ESG-based (environmental-social-governance) and values-based investing; and it’s rapidly automating the consumer investing market with the use of Robo-advisors. Once just the investment bank of the uber-wealthy, Elite institution Goldman Sachs is building out digital apps, new trading capabilities, new credit building solutions, cryptocurrency management, and a range of related personal financial management tools.

It can be easy to get seduced by the tech angle within the theme of “disruptive innovation,” but technology is merely a means to an end. As these examples show, it’s not just upstarts and start-ups that are changing the game. Today’s old-line industry leaders can also be game-changers, sometimes by strategic partnership or acquisition, but also through old-school R&D investment.

As investors, given just how fast the world is changing, we believe that it’s important to avoid being overly weighted to past successes. Thankfully, there are a lot of big, ostensibly “conventional” benchmark companies that agree.

So, when looking at growth themes for the future, it’s critical that investors not automatically count them out.

Author

Mitch York, CFA®

CIO

Concord Asset Management

———————————-

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Concord Wealth Partners, LLC (“IA Firm”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from IA Firm. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. IA Firm is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of IA Firm’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/. Please Note: If you are an IA Firm client, please remember to contact IA Firm, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. IA Firm shall continue to rely on the accuracy of the information that you have provided. Please Note: IF you are an IA Firm client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Mixed Message Provokes Volatility:

Modest gains in major market indices masked sharp volatility amid the uncertainty of mixed messaging from public officials and revived banking fears.

Over the last month, The Dow Jones Industrial Average returned –1.03%, while the S&P 500 returned 0.32%. The Nasdaq Composite Index returned 3.32%.

A Turbulent Week for Stocks

Rate Hike Cycle Ending?

The official announcement hinted that the Fed might soon be done with raising rates while also stating it was too early to ascertain the degree to which the economy could slow from the current banking strains.1

This Week: Key Economic Data

This Week: Companies Reporting Earnings

At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.

Author

Gary Aiken Chief Investment Officer Concord Asset Management

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Don’t Call It A Pivot

KEY OBSERVATIONS

ECONOMIC COMMENTARY

Inflation Still A Threat: No Cause Yet For A Party Or A Pivot

MARKET COMMENTARY

Markets Being Irrationally Exuberant?

FINAL THOUGHTS

Despite The 2022 Year-End Gift, Many Risks Remain

Author

Gary Aiken, Chief Investment Officer

Patience Not Pessimism

Key Observations

Economic Commentary

Market Commentary

Final Thoughts

About Concord Asset Management

—

Nothing New Under the Sun

Key Observations

Economic Commentary

Market Commentary

Final Thoughts

Author

Mitch York CIO Concord Asset Management

—

Goodbye and Good Riddance

Key Observations

Economic Commentary

Market Commentary

Final Thoughts

Author

Mitch York CIO Concord Asset Management

—

Key Observations:

Economic Commentary

Market Commentary

Final Thoughts

Author

Mitch York

CIO

Don’t be a greedy chicken

Author

Key Observations:

Final Thoughts

Author

Sources:

All performance data is generated through Morningstar.

Key Observations:

Cause and Effect

Final Thoughts – A Silver Lining

Author

Sources:

All performance data is generated through Morningstar.

Old Dogs, New Tricks: A Deeper Look at Disruptive Innovation.

Author

The official announcement hinted that the Fed might soon be done with raising rates while also stating it was too early to ascertain the degree to which the economy could slow from the current banking strains.¹

Gary Aiken
Chief Investment Officer
Concord Asset Management

Mitch York
CIO
Concord Asset Management

Mitch York
CIO
Concord Asset Management