Oh, those famous words from the back seat on the summer road trip! It’s certainly a question we’ve been asking recently.
With so many situations unfolding concurrently, let’s take a look at how various markets have performed year to date.
It’s unpleasant reading, we know. Unfortunately, the bond market hasn’t provided much of a refuge. Depending on what part of the bond market you’re in, values could be down between 5% and 10% for the quarter.
We’ve witnessed a very rare event this year. Some have called this the “everything” bear market. This has only occurred one other time in the last 100 years. These are certainly not normal times. Central bank policies are raising interest rates aggressively because of inflation, the likes of which we haven’t seen in decades. A coordinated effort is underway to ‘normalize’ interest rates around the world and markets are responding.
China’s zero-Covid policy is definitely making things worse, and has been a major factor affecting supply chains globally. This could be resolved with the following solutions: better vaccines, better treatments or global supply chains moving to different countries for manufacturing. Businesses will find a way.
The war in Ukraine is continuing and is dreadful to even fathom. How this situation resolves itself is currently unknown. Markets are in the process of adjusting to this as well.
So, to the question: Are we there yet? Our forecasts are still telling us that we are close to taking a pause in this bear market. Estimates are showing that we may avoid a recession this year in the US and markets will respond favourably. If a recession occurs, it is expected to be mild, and markets have already priced most of this in. Canada is not currently showing any signs of recession, but if it wasn’t for our energy sector, Canadian markets would be down as much as the rest of the world.
All of which is to say that while we’re not there yet, we believe we’re almost there. Summer is here, so take some time to regroup, refresh and re-energize. Your team at Foster and Associates wishes you a safe, healthy and enjoyable summer with friends and family.
This article originally appeared in the Foster & Associates Q2 2022 Report
