July Private Client Letter

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July Private Client Letter

The S&P 500 suffered its worst half since 1970 after inflation and recession concerns sparked a 21% sell-off. This year’s first half performance was strikingly similar to that of 1970 (also down -21%) and in both periods, high inflation was the issue. It is interesting to note that the second half of 1970 saw the S&P up 27%. Of course, that does not mean that's how it will go for the back half of 2022; however, we believe it is likely the market will move higher if inflationary pressures subside.

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Special Market Update 06/17/2022

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Special Market Update 06/17/2022

The Federal Reserve has announced an interest rate hike of 0.75% to the fed funds rate following their June meeting. This decision was in response to persistently high inflation data and was widely expected. The Fed is now predicting at least three more 50 basis point increases and one 25 basis point increase by year's end, which would put the Fed Funds rate at 3.40%. They also see rates at 3.8% by the end of 2023. And oddly, they suggested they may cut rates by 25 basis points in 2024.

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May Private Client Letter -

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May Private Client Letter -

Just when we think things can’t get any worse in this market, another wave of selling rushes in and prices go lower. Making matters worse, every attempt for a rally in the broad indexes has been quickly turned back as stocks grind lower. With four months of 2022 now in the rearview mirror, a lot of damage has been done in equities with declines of about 10% for the Dow Jones Industrial Average (DJIA), 13% for the S&P 500, and 23% for the NASDAQ.

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April Private Client Letter

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April Private Client Letter

The capital markets have been operating in a nervous phase of uncertainty and volatility from the beginning of the year. Investors have been unable to gain any meaningful traction as nearly every traditional asset class has been under pressure.

We are seeing a large-scale conflict between favorable economic data and decent corporate earnings, with a decades-high rate of inflation and the appalling war in Ukraine. Economic fundamentals and growing corporate profits would normally be net positives for the markets. However, high inflation is quickly driving tighter monetary policy and higher interest rates. This, along with ongoing geopolitical distress, are net negatives for the markets.

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March Private Client Letter

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March Private Client Letter

With geopolitical tensions and the war in Europe dominating our headlines, the two-year anniversary of the S&P 500’s pre-COVID market peak went largely unnoticed. Just over a month after the peak, the S&P 500 had plummeted by more than 30% before beginning an epic rally of 114%. While it is now hard to imagine a world without COVID, it easy to see that COVID has forever changed many aspects of our lives.

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February Private Client Letter

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February Private Client Letter

After a strong 2021, stock market volatility returned in dramatic fashion in January. The S&P 500 has had an intraday trading range of at least 2.25% in January’s final week (Bespoke). The average stock is down a little more than 9% so far in 2022, but stocks with the highest valuations are down closer to 20%.

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Economic Growth, Booming Profits, and Loose Monetary Policy

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Economic Growth, Booming Profits, and Loose Monetary Policy

As the year comes to an end, Clearwater Capital’s CEO and Chief Investment Strategist, John Chapman, offers an extended point of view on the U.S. economy and equity markets in this final Private Client Letter for 2021. Our Outlook 2022 report is scheduled for publication in January.

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2021 Equity Target Achieved

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2021 Equity Target Achieved

Over the years, Clearwater Capital Partners has maintained the discipline of establishing specific targets for a variety of economic indicators and capital markets. These forecasts are intended to bring practical application and transparency to our economic thesis. Our predictions revolve around highly recognized measurements and indexes; and this tradition provides our readers with a straightforward means by which to monitor the efficacy of our outlook.

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August Private Client Letter

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August Private Client Letter

Economists and analysts began the year with relatively muted expectations for the U.S. economy. Emergency use authorizations for COVID-19 vaccines were just being issued and there was much uncertainty surrounding their availability and efficacy. Understandably, most forecasts for the reopening of the economy were cautious, if not grim. At the beginning of the year our country was still very much in lockdown mode and while hopeful, true optimism was hard to come by.

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Outlook 2021 - Mid Year Update

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Outlook 2021 - Mid Year Update

Hard to believe it, but we have reached the midpoint of 2021 already and have finished one of the best first-half starts in years. In fact, with a gain of 14.4% it was the S&P's second best first-half performance since 1998. For the record, the Dow ended the first-half with a 12.7% gain, the Nasdaq with a 12.5% gain, and the small-cap Russell 2000 with a 17.0% gain!

The S&P has now advanced more than 5% in five consecutive quarters - for only the second time in history (1953-1954). Back then, stocks added another 26.4% over the next four quarters, so perhaps we should be open to the possibility for continued strength in the second half of the year and into 2022.

Everything about the past year-and-a-half has been unique and it is as important as ever to maintain an intelligent framework for decision making. To this end, we are pleased to present our Outlook 2021 Mid-Year Update. Here you will find our latest forecasts for what may be coming our way.

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June Private Client Letter

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June Private Client Letter

U.S. equities continue to grind higher as we move into the summer months. Following a minor pullback of about 4% for the S&P 500 (and nearly 7% for the NASDAQ) early in May, stocks have been broadly rebounding. As June begins, the U.S. equity markets stand within striking distance of reaching new all-time highs.

Optimism over much better COVID-19 data, the reopening of our economy and the anticipated wave of activity in the second half of the year, continues to support stock prices. While recent economic readings have been mixed, consumer sentiment remains strong and both industrial production and manufacturing activity are now up substantially from a year ago.

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May Private Client Letter

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May Private Client Letter

The pace of economic recovery, following the painful COVID-19 shutdowns, appears to be accelerating. The initial estimate of real GDP growth shows that the economy surged at an annual rate of 6.4% in the first quarter of 2021. Double-digit personal consumption growth led the way in the first three months of the year due to widely available vaccines and fewer restrictions on business activity.

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April Private Client Letter

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April Private Client Letter

It has been just over a year since the equity markets hit their COVID-19 lows. On Monday March 23rd, 2020, the broad indices all hit new lows after nearly a month of indiscriminate selling as the scope of the pandemic became clear. Since then, the Dow Jones Industrial Average and the S&P 500 have both gained just about 80% and the NASDAQ 100 is up about 90%. Many large cap stocks have doubled, tripled or more from their panic-induced 2020 lows.

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Outlook 2020 - Mid Year Update

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Outlook 2020 - Mid Year Update

The COVID-19 pandemic continues to dominate our lives, the economy and capital markets. Our base case for the economy and markets presented in our Outlook 2020 report, published just last January, has been wiped out by the COVID outbreak. We must now reconstruct our expectations for the balance of the year – while assessing a recovery that will likely stretch into 2021 and 2022.

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May We Live in Interesting Times - Private Client Letter

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May We Live in Interesting Times - Private Client Letter

To say that we are living in “interesting times” would not do justice to what we all have experienced since the COVID-19 outbreak made headlines in February. What began as a serious health crisis quickly turned into an economic collapse as government leaders issued lockdown orders and essentially brought large parts of our economy to a standstill. Never before has the United States shut off its economy by proclamation. Interesting times indeed!!

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March Private Client Letter - Navigating a Crisis

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We at Clearwater Capital Partners have often written about the importance of “facts over feelings” when it comes to navigating periods of market volatility and uncertainty. The current breakout of the novel coronavirus has produced a significant spike in feelings (specifically “fear”). Now is the time to keep emotions in check as we attempt to ascertain the “facts” connected to this difficult situation. We believe one’s reaction to higher volatility will be far more determinative to long-term progress than the volatility itself.

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