Market Trends & Outlook

Jerome Powell isn’t Paul Volker, and this isn’t 1982. As of late, market analysts are stumbling all over themselves, trying to outdo each other on the “why this time is different” related to the Federal Reserve’s ongoing inflation fight. One of the more interesting comparisons came from the always uber-bullish Tom Lee of FundStrat.

Long-term returns are unsustainable. I realize that is a bold statement that flies in the face of mainstream analysis. How often have you seen the following chart presented by an advisor suggesting if you had invested 120 years ago, you would have obtained a 10% annualized return?

Long-term returns are unsustainable. I realize that is a bold statement that flies in the face of mainstream analysis. How often have you seen the following chart presented by an advisor suggesting if you had invested 120 years ago, you would have obtained a 10% annualized return?

Markets shook off the 2022 doldrums in July, with every income-oriented asset category tracked by HANDLS In-dexes gaining positive returns. MLPs rebounded from a dismal June to return 12.7% for the month of July, bring-ing year-to-date return to 23.5%. With the Utilities category gaining 5.4% in July to bring its year-to-date returns to 5.0%, MLPs and Utilities are the only categories to have earned positive year-to-date returns through July.

Of course, such sentiment is not surprising given that over the last decade, investors have repeatedly been beaten into submission to buy stocks when the Federal Reserve is easing monetary policy. Such was a point we discussed in “Pavlov’s Dogs & The Ringing Of The Bell:”

In an environment set up to be a lost decade for many traditional asset classes, a potentially compelling option is moving from a 60/40 to a 50/30/20 portfolio allocation model to integrate a fund like the Catalyst/Millburn Hedge Strategy Fund (MBXIX), which has generated positive returns in both bull and bear markets.

No recession. That was the recent declaration from Treasury Secretary Janet Yellen, noting that consumer spending, industrial output, credit quality, and other indicators don’t suggest economic risk.

As expected, Wall Street wins again. In 2020 and 2021, retail investors were chasing financial markets recklessly. Armed with sites like Reddit WallStreetBets and a Robinhood trading app, not to mention young investing mentors on social media, they believed they had the Wall Street “tiger by the tail.”