Equities were quietly volatile following the second biggest weekly rally of 2022 with money managers rebalancing their portfolios in the final days of the quarter.  The NASDAQ 100 underperformed, declining about 1%.  Boosted by energy, the Dow was nominally lower by 0.2%.

As noted last week, 2022 is the worst start of a year for equities since 1970 as the markets grapple with 40-year high inflation and a Federal Reserve that is vastly behind the curve.

Treasuries are also posting their worst year since at least 1973, much of the carnage in long dated debt only occurring in the past 30 days.

The only segment of the S & P 500 that is posting a positive 2022 return is oil, up about 34% YTD.  The oil sector however was the only declining sector last week falling about 1.6%.

Speaking of oil, Bloomberg reported led by Germany the G-7 is edging closer to “ditching its pledge to end fossil fuel financing.”  The Group of Seven had pledged “to end the financing of all overseas fossil fuel projects by year end.”  As recently as May, this group reconfirmed its commitment to this pledge.

As written several times, green energy proposals are popular but green energy policies create unrest and potential economic chaos.  Today’s environment is exacerbated by Russian sanctions.

Treasuries declined yesterday after the 5-year Treasury auction was met with weak demand despite offering the highest yield in more than a decade.  Bloomberg writes demand for the 5-year was the worst since December 2010.  Is this a harbinger of things to come, perhaps the result of the commencement of QT?

What will happen today?

Last night the foreign markets were up.  London was up 1.19%, Paris up 1.23% and Frankfurt up 0.65%.  China was up 0.89%, Japan up 0.66% and Hang Seng up 0.85%.

Dow and NASDAQ futures are up about 0.5% as China softens its strict COVID protocols.  The 10-year is off 8/32 to yield 3.25%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.