June Swoon

Hello fellow Boodle members and everyone interested in learning about investing! Welcome to the June 2022 edition of the Boodle Blog. There is a lot of financial/economic news to report on, so let’s get to it. The outlook for stock market advancement remains problematic, as it has since January.
The Federal Reserve has turned “hawkish” on interest rates, and we saw that hawkishness last month with an interest rate hike.
We will try and not be too complicated here, but the Federal Reserve had what can best be described as a ”loose money” policy, and you could see that policy a few years ago when interest rates were low, money was easy to come by, and the Federal Reserve was printing money, and amassed $9 trillion dollars on its balance sheet!
Now with that kind of money sloshing around in the economy because they were trying to reduce the ill-effects of the pandemic, the Fed now feels like it’s time to wring that $9 trillion out of the economy. Boodle believes that we have a 33% chance of a recession if the Fed removes the money too quickly by hiking interest rates.
June 30 marks the end of the first half of the year, and we can expect to see Q2 earnings from corporations. Normally, these numbers would help buoy stock prices, but in a rising rate environment that we currently find ourselves in, do not expect much support from earnings.
Investors may not experience any relief until November after the 2022 midterm elections. A shift in parties under Congress could be a dynamic change that has a positive effect on your portfolios. Boodle will be watching these developments closely.
Our stance on the stock market has not changed. You should temper any expectations for portfolio growth at this time. Continue to hold all current assets in your portfolios. Allocate any new money in your portfolio to your money market accounts. We may see a buying opportunity develop in the fall of 2022, and if we see such an opportunity, this is when you will want to put that cash to work in your portfolio. Boodle is monitoring the stock market closely, and the economy as well, and we will alert you should conditions continue to deteriorate. As we go to press, the market, as measured by the S&P 500 is down 13.22% year to date. Here are two definitions you should always keep in mind – the definition of a Bear Market is a 20% fall in the market from a recent high, and the definition of a recession is back-to-back negative GDP (gross domestic product)  returns. We have had one GDP Negative quarter, so we will pay close attention in July when the number comes out.
So with that being said, stay focused on positive things in your life, try not to fret about your portfolio, boodle is watching the markets, and stay tuned to this blog and stay up to date on all things financial! Have a good month, and we will see you back here in July!