string back to the major indexes, the stocks posting
their worst quarter since the pandemic crash of 2020.
Thanks to our executive producer Cathy Chapel is for that
data point for the month, the S and P
the NASDAQ and the dow will hire By about 2-4%
. But they were all down on the quarter,
the first three months of the year. In that
first quarter coming to a close today, the S
and P down 5%. The dow down 4.5% of
the NASDAQ down 9.1%. I do want to bring
in our guests to break down the market action brian
vending President of M. J. P. Wealth
advisors brian thanks for joining what a month it was
. I mean you needed an iron stomach to be
invested in trading this stock market. Where do we
stand today with three more quarters left before the end
of the year. Great to see you again,
kristen and that's the great that's the question that's on
a lot of investors minds because this quarter is a
great example of what uncertainty means. We have geopolitical
crisis, we have quantitative tightening. We're living in
a high inflationary world wondering if corporate earnings can continue
to expand. I think what's what's fair to assume
is that going into friday's jobs report and thinking about
future fed meetings in March and june I think investors
are being somewhat cautious in trying to see if fundamentals
can continue to expand in light of some of these
macro economic and geopolitical concerns. However, our view
is that when you peel back the onion, we've
seen that over the last couple of weeks, the
economic data has been coming in has shown that the
economy is resilient and there still is an opportunity to
expand as supply chains, hell as the service is
part of the economy has a chance to reopen over
the balance of the year. And we still expect
corporate earnings to expand when looking at outlooks and guidance
that we've heard from some, some companies in the
short term and we're definitely going to hear from some
more over the next couple of weeks. So I
think the second half is still setting up for a
better first half and I would still encourage investors to
stay fully invested and think about equities versus some other
asset classes. Interesting. Well, the Fed of
course, said to raise rates again multiple times this
year, perhaps more aggressively than originally projected, you're
right, still uncertain playing out on the international front
with Russia still invading Ukraine And inflation here at Home
Wall Street and Main Street, both finally, two
years into this pandemic, do feel the negative impact
of higher prices running at their fastest pace in 40
years. What do investors need to know Brian heading
into this next earning season? It sounds like there
will be winners. There will be losers and choppiness
certainly could continue. Definitely. That's a great point
. I mean, I think we need to be
really selective and the type of companies that we want
to invest in moving forward. I mean, first
of all, we still think that the global economy
is going to expand on a full year basis at
around 3%. And that's still, there is a
chance for that expansion as well here domestically. So
companies that play well into that expansionary move would be
the cyclical companies. I think small cap stocks that
have been abused with some of the recent Pullbacks are
really more of an opportunity moving forward, especially in
the value space where you find companies that are more
profitable than the growth side of the house and that
really plays into that reopening of the service is part
of the economy also basic materials, industrials, energy
financials make sense. But don't forget technology, I
think some of the very profitable technology stocks still make
sense as part of your portfolio. And what you
should be cautious about going back to your question are
companies that do not have stable cash flows that do
not have stable outlooks and do not have pricing power
because we have to recognize that we are in an
inflationary environment. So that's interesting to brian, I
mean traditionally you could invest by sector, right?
But even within particular sectors, there are winners and
losers companies that are more equipped to handle the daily
uncertainty and pressures that still exist. Are their sectors
in general though, that you would advise clients stay
away from at this time or is it really just
individual names? Well, I think from a sector
perspective kristen I would stay away from sectors that have
higher multiples, higher valuations and low profitability. So
some of these higher flying tech sectors that we've known
about, that, we've heard about that have done
well with the pandemic, but now are starting to
lose some steam when you think about the Federal Reserve
, potentially increasing interest rates, 50 basis points in
May and also doing it again in june. I
think I would be cautious there just because valuations and
multiples get compressed. I think it's also fair to
assume that you've got to keep a watchful eye on
interest rates going up and how that impacts defensive sectors
such as the utility market or consumer staples because then
there's a tradeoff on risk where you can find yield
in other places and and not take on the same
through equities and and volatility. However, I will
know that some unique sectors have presented themselves, such
as private equity real estate or thinking about agriculture or
agribusiness on an overall basis. When you think about
disruption in grain and wheat prices and supply there,
there's gonna be a renewed demand for the ag sector
to step up to help to combat the concerns of
rising food prices. Here's a question for you Brian
, we saw the yield curve and birth this week
for the first time since 2006 and of course historically
that does send a warning sign that a recession could
be on the horizon. The general consensus on Wall
Street seems to be that a recession is not imminent
in the next six months, for instance, right
interest rates are still extremely low and inflation yes,
does creep higher. But we're still sort of at
the early stages of this tightening process. I do
see Goldman Sachs though, Major bank with a ton
of resources looking in through the state of the market
coming out and saying that it sees risks rising for
a mild recession, but not for at least another
year for investor, an investor with the longer term
horizon. And let's say a year, three years
, five years who might be hoping in an inflationary
environment to make some money, see some actual return
on their investments in the stock market and put that
toward a home or some other purchase or simply just
grow their wealth, what should they be aware of
? Do you think a recession could come in a
year's time? Sure. That I really would like
to comment on that directly in the standpoint of think
about risk, think about how much risk someone wants
to take. And if we have a horizon of
less than one year, it probably makes sense not
to gamble with those assets in this environment, considering
some of the uncertainty, especially when you're talking about
purchasing a home, which is usually someone's most prized
asset. But if you think about it from a
longer term perspective moving through recessionary cycles in the past
, you know, stocks are long term real assets
and have shown to be the best hedge for inflation
, especially those that can expand their dividends. Do
buybacks um you know add value to for shareholders.
So I still think in this environment right now,
even though there are recession risks that are on the
horizon and that's primarily due to the fact that the
Fed is trying to dance through the raindrops here.
They're trying to fight inflation while at the same time
support the labor market and not tap the brakes too
much on the global economy, slowing down. It's
definitely a tough spot to be. But I think
bigger picture you move past recessionary environments, you still
see markets expanding, you still see capitalism and profitability
at work. So I would say to the folks
that have the right perspective around risk stay broadly diversified
. Think about companies that are robust that are supporting
our society to have those cash flows that can expand
and investors usually over time, Kristen get appropriately rewarded
. Okay brian vending president of M. J.
P. Wealth advisors brian, we appreciate you taking
the time on the final trading day of the first 00:08:24.579 --> quarter