2 Charts We are Watching, Positive Earnings and two pieces of good news from the Riggs Team
2022 has started a bit rocky in the U.S. equity markets, but we see opportunities ahead as the year progresses. We also want to share some happy news from Riggs Team members. So let’s dive in.
Six weeks into the year and the markets have been driven by:
- Federal Reserve Policy Change from adding liquidity (money) to extracting liquidity from the economy. As you know, the investment markets do not like surprises, so the shift in policy is creating investment market unease. Once the new Fed policy is in place, the markets will adjust. This chart illustrates how markets have reacted before, during, and after Federal Reserve tightening cycles.
- The headlines around Russia’s potential invasion of Ukraine Crisis and geopolitical events occur more frequently than you might expect, as this chart illustrates. But as we stated above, the markets do not like surprises, so volatility should be expected during the crisis, but markets adjust once the dust settles. We expect that a similar pattern will occur this year.
- U.S. Companies are strong and are surprising to the upside. The bright spot so far this year has been strong earnings releases. With 70% of companies in the S&P 500 through their Q4 Earnings Releases, about 80% have exceeded analysts’ expectations. As we listen to or read through the various earnings releases, we see a pattern of more streamlined companies that are laser-focused on growth.
Our expectation for 2022 is that we will see more volatility as the market adjusts to unknowns from Fed Policy to geopolitical events to mid-term elections. This year will require a bit more flexibility from investors. But company balance sheets are strong, and the resilience and focus on growth that we see from corporations will bear out some excellent investment opportunities. We have been adjusting our clients’ portfolios to take advantage of these opportunities, and we are optimistic that 2022 will be another good year for Riggs’ clients.
Now and then, we like to share news from the team.
We are happy to announce that Southwest Region President Craig Baker and his wife, Lauren, welcomed a baby boy, Brycen Bluto Baker, on February 1. Congratulations to the entire Baker family on this joyous addition!
We are also excited to announce that John Baum has volunteered to serve as the Director of Philanthropy for the Polaris Program—a SpaceX program that consists of up to three human spaceflight missions that will demonstrate new technologies, conduct extensive research and culminate in the first flight of SpaceX’s Starship with humans on board. Polaris supports St. Jude’s Children’s Hospital as no child should die in the dawn of life. To read more about the Polaris Program, click here.
The Riggs’ Report is written and published by Riggs Asset Management Company, Inc. The information contained in this Report is for informational purposes only and should not be construed as investment advice.
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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Riggs Asset Management Company, Inc. (“Riggs”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Riggs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Riggs is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the Riggs’s current written disclosure Brochure discussing our advisory services and fees is available upon request. Please Note: If you are a Riggs client, please remember to contact Riggs, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Riggs shall continue to rely on the accuracy of information that you have provided.