Transcript:
Tom Vaughan:
Everybody, welcome to Wednesday, the S&P 500 was up 1.9%. Today, went from a red shirt day yesterday to a green shirt day today pretty incredible altogether. I do think it’s kind of important in this timeframe, we’ve got all this negativity that’s happening, you know, in the press loves negative. So we all get kind of blasted with a word got a pandemic, we’ve got high inflation, got a Federal Reserve that’s really getting kind of aggressive on the inflation, we got an invasion slash war happening in Ukraine. We got supply chain issues, and shortages of labor and all of these different areas. But if you really look at what happened so far, this year, on the fourth of January, we in the middle of the day, we hit the highest point for the S&P 500. And on Thursday morning of last week, when Russia invaded Ukraine, we hit the lowest point in that morning. And the total from that high point to that low point was down 14.6%, which, you know, isn’t great. But that’s actually the average the average rate of return for the S&P 500 during a downturn when there’s no recession is 15%. Negative when there is a recession is negative 36.
Of course, we’re not having a recession. Matter of fact, Chairman Powell was meeting with the, with the Congress today, talking about how hot the economy was and how hot the job market was, and what have you. We’re pretty far away from a recession. And I think that’s, you know, why there’s some pieces that are happening, there’s people worried about that, and it just doesn’t seem to be in the cards anytime soon, in my opinion. Then you got the other side here, which is kind of fascinating. To put it in perspective, you know, Russia did invade Ukraine. And Thursday morning, the market opened up quite low. rally back for a positive return, one of the biggest turnarounds we’ve seen really in history on that particular day. But if you look at the lowest point on Thursday morning, and the highest point today, the market is up six and a half percent since Russia invaded Ukraine. We’ve had oil prices skyrocket, we’ve had massive sanctions, all kinds of uncertainty and the markets up. And that’s not unusual. That’s actually been the norm for these types of situations where there’s invasions and what have you. So there’s probably a couple reasons for that. One, is the actual situation in Ukraine might slow the economy down some, and we already have a red hot economy slowing it down. So it’d be a good thing would maybe allow the Federal Reserve to be more moderate. And they actually taught and Chairman Powell actually talked about that today in his testimony. So very fascinating timeframe that’s happening here. All together. We’ve been more or less going sideways today, although this week, although today we did get above the closing point that we had on Friday. So I thought that was good. So you know, maybe maybe last Thursday was the low, we’ll find out, you know, as far as as things go through here.
But there’s, there’s a reason that even in all of this negativity, that market theoretically should be down more, right. I mean, there’s a lot of things happening, especially if you focus just on the negative side. But the basics are still there. You know, earnings have been fantastic. Interest rates are very low, the economy is still growing, my effect, last quarter grew 7% on the gross domestic product, which is an amazing number. And so people aren’t willing, you know, and in mass to throw away all their stocks in this environment, even with all this negativity, because there are other positive things and somebody says, hey, you know, I don’t want to sell that stock. They just had great earnings report, that type of thing that’s happening. As far as that goes. I think earnings reports slow down, I think the economy slows down. I think that’s inevitable. I think that’s a good thing. I also think that supply chain issues are going to get better. This war in Ukraine is going to kind of put a crank in some of that. But I think all together, by the end of the year, we will have improved supply chains from versus what we have now. And that should help increase supply to start meeting some of this demand, which I think will slow down some too, I still think we have a pretty good chance of a good rate of return throughout the full year with most of the return coming, you know, really in the second half of this year. And so anyway, that’s what’s going on right now. A really, really incredible timeframe. Lots of cross currents and inputs coming in. But things are okay, as far as I can tell. And certainly the market is kind of signaling to you that it’s not as bad as it seems. If you add up all the negative A lot of times the positive just isn’t being counted enough and that that’s what the markets telling us right now. So look forward to talking to you tomorrow and see let’s see what happens then. Thank you