Three Things to Know & Watch – 02 May, 2022

May 2, 2022

By Bill Hornbarger, Chief Investment Officer

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Three Things to Watch

  • This will be a busy week with the biggest focus on the two-day Federal Open Market Committee meeting. Futures are currently pricing a 50 basis points (bps) increase in the target Fed funds rate as a certainty with small odds of a larger, 75 bps increase possible. Fed Chairman Jerome Powell will hold a press conference Wednesday afternoon after the announcement.
  • The economic calendar includes updates on the manufacturing sector (ISM report), construction spending, durable goods orders, and the April employment report. Non-farm payrolls are forecast to increase 390,000 with the unemployment rate falling to 3.5%.
  • Earnings season continues this week. Last week’s negative surprises from Netflix and Amazon overshadowed what has overall been a positive earnings season. Of the 279 companies that have reported through Friday, 81% have exceeded expectations with an aggregate earnings surprise of 3.06%.

Three Things to Know

  • With data going back to 1976, this is the first time ever that both stocks and bonds are in a >10% drawdown at the same time. The S&P 500 is in a 13% drawdown while bonds are 11% below their 2020 high (using monthly total return data). Source: Charlie Bilello)
  • The last eight times the S&P 500 was down in a calendar year, bonds finished the year up, cushioning the blow. So far, 2022 has been a different story with the S&P 500 down 12.9% and the Bloomberg Barclays U.S. Aggregate down 9.50%. (Source: Conway, Charlie Bilello)
  • At the end of April, the average Russell 1,000 stock was in a drawdown of 27.4%. Communication Services and Technology stocks are at -35%+. (Source: Bespoke Investment Group)


The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.