May 2, 2022
Good morning,
Clearly, I jumped the gun Friday, not waiting for the final day of the month performance before printing ugly numbers for April and the year. Friday’s one day performance made for a bad month all by itself. Added to what was already poor, April ended up being the worst month in 2yrs going back to the start of the pandemic. Not exactly a languishing tape either, my apologies for characterizing it that way too.
It’s the start of a new month and hope springs eternal as institutional money managers look at a fresh P&L statement. Unfortunately, hope is not a very good strategy and Futures are in the red (-.25%) showing no signs of a bounce from Friday’s severe sell-off. Perhaps that’s because it’s a very big week ahead for markets. There is another slew of earnings announcements to digest, an Australia Rate decision on Tuesday, the highly anticipated Fed rate decision and briefing by Chair Powell on Wednesday, the Bank of England rate decision and briefing on Thursday, and finally the U.S. April jobs report Friday.
The market as measured by the S&P 500 Index is back down to its lows set in February and tested again in March. I suspect those lows will not hold up in the near term. However, as mentioned Friday, without a recession – still a low probability in the next 12-18mo according to the data – any further sell-off should be contained in the mid-teens, and we’re not far from there at this point.
As mentioned several times already, the weeks/month ahead are not going to be fun. The VIX is close to 35, now suggesting highly volatile days ahead. However, this too shall pass, and we are Triple C (calm, cool and collected) here. That is my wish for you as well. It will be all right.
Be well,
Mike