MARKET RECAP

• US stocks fell by 2.74% while international stocks and bonds both fell by 1.71%. The yield on the 10-year treasury increased by 26 basis points to an even 2.00%.
• If earnings estimates hold for 2022, probably unlikely, but if they do, the current p/e on the S&P 500 is 18.57 (see the red bar below), not much higher (about 5%) than the average since 2004 of 17.66.
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• The Fed’s bond buying program finally ended this past Wednesday. Incredibly, the Fed was pumping money into the economy while the economy was soaring and the government was literally pumping in trillions via fiscal stimulus. And now they wonder why there is an inflation problem.
• Markets are beginning to price in a recession. According to Nikolaos Panigirtzoglou, from JP Morgan’s global quantitative team, the US equity market has priced in a 50% probability of a recession and the investment grade bond market is assuming a 43% chance.

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