Weekly Market Report: April 4, 2022
Last week put a wrap on the month of March and the first quarter of 2022 with oil markets, inflation, and the yield curve driving the narrative. The first three months of the year delivered quite the rollercoaster ride with double digit equity market swings in both directions while March was a solidly positive month for stocks, commodities, and the USD. The same cannot be said for bond markets which ended the month with a bear flattener, an inverted 2y-10 yr slope, and higher rates in five of the last seven quarters.
• U.S. equity markets were flat for the week but delivered strong returns in March with value (+3.5%) outperforming
growth (+2.4%) and large caps outperforming smaller caps. Energy and utilities were the standout performers while
financials and telecom lagged.
• Sector leadership across the U.S. markets so far in 2022 is basically energy then everything else, a mirror image and
clear departure from the technology led market over the past three years.
• U.S. equity markets falling and rising over 10% in a quarter is both very rare and perhaps (historically?) a positive setup to the coming months.
• While the stock market bounced sharply higher over the last two weeks of March, the bond market did not. Bianco
Research noted March was the eighth consecutive month of losses for The Global Aggregate Index.
• The 2yr/10yr slope inverted last week, triggering much hand wringing and recession talk. The reliability of the indicator and equity market performance following inversions are mixed at best.
• Statista published an alarming snapshot of crypto heists dating back to 2014 estimating over $3.1b in theft cumulatively over the past eight years.
• The Administration announced a plan to release strategic petroleum reserves of 1mbpd for a period of six months while reinvesting proceeds in the out years, effectively taking advantage of record high backwardation currently seen in the market.
• The Administration also announced plans to introduce a speculation tax on companies that have federal land drilling
leases but are not producing out of those acres.
• The Administration announced plans, under the Defense Production Act, to support production and processing of key battery inputs (lithium, nickel, cobalt, graphite, and manganese).
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