The second half of the year is off to a good start as the S&P 500 rallied roughly 9% in July.  While this rally was welcomed by investors there is still a lot of work to be done as the S&P 500 closed the month down about 13% for the year. (YCharts)

For many investors the two most important drivers this year have been inflation and The Fed.  The June CPI reading came in at 9.1%, the highest in 40 years, and the Fed responded by raising rates another 0.75%.  While headline grabbing, neither of these developments were particularly surprising.  Future inflation readings are likely to impact consumer sentiment and monetary policy for the rest of the year.

The challenging first half of 2022 is now in the books as the S&P 500 dropped roughly 8% in June bringing the year-to-date return to about -20.5%.  While stocks struggled, they were not alone, as most asset classes have been negatively impacted this year, including fixed income, with the US Aggregate bond market down about 11% for the year.

The good news is that we made changes to portfolios in April to manage risk due to the fact that we felt the chances of recession were rising.  Thus far, that change has been a good one for portfolios and we continue to have a portion of our growth portfolios defensively positioned today. 

The volatility we’ve seen since the beginning of the year continued in May as stocks alternated between strength and weakness, with the S&P 500 closing the month almost unchanged.  One piece of positive news for many investors was that the bond market stabilized with the Bloomberg Aggregate Bond Index up roughly 1% for the month after seeing losses in the first four months of the year. (YCharts)

We made changes to our portfolio positioning in mid-April in an effort to reduce risk within the growth portion of accounts.  While this defensive shift has worked well so far, we continue to monitor current economic and market conditions for potential changes.  As we look to the next 6-12 months, recession risks have risen but our economic dashboard does not yet signal that a recession is imminent.

ENZO T. PELLEGRINO, CFP®  RECOGNIZED IN FORBES

AS A 2022 BEST-IN-STATE WEALTH ADVISOR

--Named the 24th Advisor in Texas--

San Antonio, TX - April 14^th, 2022 - Enzo T. Pellegrino, CFP® of TLWM Financial was recently ranked No. 24 in Texas in Forbes’ 2022 Best-In-State Wealth Advisors list.  

According to Forbes, the annual ranking spotlights the nation’s top-performing advisors, evaluated based on criteria* that includes industry experience, client retention and assets under management. View the full list.

“On behalf of LPL, I’m thrilled to congratulate Enzo for this distinguished industry recognition from Forbes,” said Angela Xavier, LPL executive vice president, Independent Advisor Services. “With more than 20 years in the financial service industry, Enzo has become an experienced source of knowledge and support for their clients. As a top advisor in Texas, Enzo is harnessing the value of the independent model to provide a differentiated client experience and most importantly, help make a meaningful impact on the lives of his clients.”

April was another challenging month for investors as the S&P 500 was down almost 9%, while bonds also struggled as the Bloomberg US Aggregate Bond Index fell about 3.5% (YCharts).

March was another volatile month for stocks as the S&P 500 pulled back at the beginning of the month before rallying nicely to finish the month up 3.58%. 

We believe that this back-and-forth volatility has been driven by three main factors: 

February was a challenging month for stocks as the volatility that arrived in January continued with the S&P 500 finishing the month down 3.14%.  Investors were focused on the potential impact of uncertainty in the markets; primarily, the Russia-Ukraine conflict, Federal Reserve policy, and inflation. 

The recent invasion of Ukraine has led to a lot of questions about what investors should do right now.  This invasion is clearly a major geo-political event and a humanitarian crisis for the people of Ukraine.  Moving forward our job is to think about how this event may impact the economy and markets and position portfolios accordingly.  With that in mind we’re going to review a few key things to consider:

We hope that your year is off to a great start!  The stock market has certainly kept us on our toes to start the year.  January brought with it some volatility as stocks pulled back to begin the year, with the S&P 500 ending the month down about 5%. (YCharts)

In our annual outlook that we published late last year we highlighted a few key themes to watch including inflation and monetary policy. We didn’t have to wait long for these factors to impact markets as we saw the following developments:

TLWM Financial – 2022 Outlook