Weekly Market Commentary, April 18, 2022
“What to Watch This Earnings Season”
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
April 20, 2022
Dear Friends and Clients,
Attached find the LPL Weekly Market Commentary on “What to Watch This Earnings Season”. Yes, get the most recent annual report of your favorite publicly held company, curl up by the fire with a bag of caramel popcorn and dial in the earnings conference sponsored by their investor relations department…then…ZZZzzz…beats melatonin or warm milk...
Well, in all seriousness there is good news. Earnings for the S&P 500 are up 5% year over year, despite a lot of pressure from rising labor costs, the continued supply chain problems and uncertainty related to the conflict in the Ukraine to name a few. This report is worth reading. I believe in the theory that over time the price of stocks must follow the growth of earnings. There are many things for investors to consider before investing but foremost in my thinking is to buy businesses that have earnings and improve them.
A curmudgeon might point out that after a year and a half of Covid 19 disruptions earnings had to be better. I am not feeling curmudgeonly. I see green shoots.
There is one big alligator in the swamp. Inflation. Before you cry, “Holy Weimar Republic Batman!” take heart.
Ryan Detrick makes a pretty good case for why inflation just might be peaking. You can read about it on the LPL Research Blog:
Three Reasons Inflation Could be Nearing a Peak-Ryan Detrick Chief Market Strategist LPL
Perhaps we are seeing a light at the end of the Tunnel. Hopefully it is not an on-coming train. Irrespective of the challenges ahead, one of the strongest arguments for capitalism is it highlights humankind’s most important attribute: adaptability. Curmudgeons say that the more things change, the more they stay the same. Not true. The more things change, the more we adapt. Those who don't adapt are selected out.
For all its volatility, seeming unfairness and destructiveness capitalism works. In 1942 Harvard Economist Joseph Schumpeter coined the phrase ‘Creative Destruction’. No one likes creative destruction when it’s their creation being destroyed, but something must die from time to time to keep the soil fertile. By the way, does anyone want my collection of pet rocks and Betamax movies?
It has been a tough 1st quarter for investors and there are no guarantees going forward. Experience suggests that if we have patience, discipline, and invest within the boundaries of our temperament we will do well over time.
In the meantime, Deb and I will be unavailable from Thursday April 21st and return Monday May 2d. The LPL Home Office phone is 1-800-877-7210. Please do not leave emails or voice messages with account instructions or trade requests. We are unable to act on them.
Enjoy the remainder of spring and get ready for summer.
And if you see a curmudgeon without a smile, give them yours.
Disclosure: The opinions voiced in this material are for general information only. They are not intended to provide specific advisor recommendations for any individual. There is no guarantee that a diversified portfolio will enhance overall returns or
outperform a non-diversified portfolio. Diversification does not protect against market risk.
Truly,
Stephen R. Judge, ChFC CLU
Financial Advisor
LPL Financial
One Oak Plaza Building
1 Oak Street, Suite 206
Asheville, NC 28801
T: (828) 348-5216
F: (828) 348-4309
www.stephenrjudge.com
steve.judge@lpl.com