Hello, and welcome to our market alert video for today, which is April 29, 2022. Before we get going, I want to just tell you that my wife, and I achieved a milestone 37 years of marriage as of last Thursday, and we went out to dinner to celebrate. We kind of looked at the last 37 years and, you know, I asked her, I said, what is it that kept us together? What’s, what’s your favorite thing about me? What do you think about me? And she said, you make me laugh. And I said, well, that’s good because I like making you laugh. So, so we fit! Anyway, let’s talk about where we are with this with the stock market and the economy. Where it looks like we’re going from here. One of the things that we are looking at is the worst start for the S&P since World War two, according to Barron’s. That’s a long time! We have a lot of headwinds as we go forward, we got numbers on inflation, from the wage standpoint as an index that looks at that, and it is the highest increase in that index in wages, since that has been recorded. What that means is, is that that portion, the wages portion of the inflation that we have, right now, it’s going to be very sticky. What I mean by that is that, you know, if you hire somebody, and you have to pay them a lot to get them a year from now, you’re not going to say guess what, inflation is abated, so I’m going to cut your pay wouldn’t go over very well. If that’s the case, if inflation is stickier than we think, then what’s going to happen is that the Federal Reserve will probably need to be far more aggressive than they currently are telling us. And if that happens, we could have a recession. Like what we saw back in the early 80s, when the Federal Reserve had to attack inflation aggressively, it was not pretty then and may end up not being pretty now.
You know, the other headwinds, China with their battle against COVID, the supply lines are significantly impaired right now that’s causing more inflation. We have the war in Ukraine, which is causing oil prices to spike. Also, you know, Ukraine is a very important country on a variety of fronts. They produce 40% of the wheat supply for the whole eastern side of the world, as I understand it, there could be food shortages, and they also produce 70% of the phosphorus. This was news to me, but phosphorus is what farmers use to fertilize here in this country. In fact, I was talking to a gentleman, he’s a farmer, and he said, you know, he can’t get phosphorus! If you could get it, the prices are up 500%! If farmers don’t have fertilizer in this country to produce food with, we could have food shortages in this country. This whole situation is a mess!
We think that it’s very possible that we could have what David Roach who is one of the people that I follow, I think he’s a smart guy. He’s a chief investment officer. He said that we could be here in a “war-session”, not a recession. What happens when you have wars, is that you have potentially a recession. Usually, recessions cause prices to fall and inflation to fall. In wartime, when you have recessions, what he said, according to his research, is that you also have inflation, which is another word for stagflation, a slowing economy with higher inflation. If that happens, he said, we could see a significant bear market coming. So, it feels like a perfect storm of things that are coming all together. And it doesn’t look like it’s going to be pretty.
So my question to you would be, do you have a strategy you should be thinking about right now? In my opinion, about the downside, not the upside, you should have one. I think it would be a good idea to review the amount of risk you’re taking, and do you have a strategy to protect yourself if this turns into a big bad bear market, and we may already been one, we just don’t know it. The market peaked a little while ago. All those things we would love to do for you! Maguire said in that movie years ago, helped me to help you. If you would like, you can visit with one of our retirement planners. They can go over with you where you are now and what we are doing with our clients, and perhaps help you to mitigate the losses that potentially could come and to look at your you know, how you’re invested, and your entire retirement plan. We’d love to do all of that for you at no charge or obligation. Our website is RPOA.com, if you want to avail yourself of that, but right now is a very, very risky time in our view, and a time to reassess how much risk is appropriate and whether you even want to be in this market. Thank you for watching this video and we’ll talk soon!