BCA Weekly Commentary 2/18/22: Nothing Is What It Seems
Updated: Mar 5, 2022
ECONOMIC IMPACT. We continue to expect growth to slow as we move through 2022 tied to aggressive interest rate hikes by the Federal Reserve. While most are worried about inflation we are focused on the realization of slowing growth which may last for a significant time. Further, we believe inflation as reported by gov't stats like CPI index which shows 7.6% yearly inflation is under reporting the actual inflation rate which may exceed double digits. Evidence of this is clearly shown by the Import/Export Price stats for January which well exceed the CPI.
To make matters worse, although January retail sales as reported by the Commerce Department came in at a better than expected 3.8% month over month the actual unadjusted number (for seasonality) by the gov't FELL a record 18.5%. And this is despite the effects of rising inflation which boosts retail sales indicating demand is much lower.
The conclusion is since inflation is running higher while end demand lower this may spell trouble for consumer spending & economic growth in the months to come.
INVESTMENT IMPACT. For the week we added several health care names to models based on the belief that with Covid-19 waning and weakening economic growth medical procedures will begin to rise/recover despite weaker economic growth ahead. Since, many health care names remain near 52 week lows (vs market indices no where near) this remains an area of concentration in model portfolios for long term returns.
Our model portfolio performance has been updated on our website as of 1/31/22.
For more insights see our website and disclosures found there at BCA. The thoughts contained in this newsletters are intended lend insights into BCAs current & future thinking on changes to BCA model portfolios. They are not intended to be recommendations and should not be taken as such. As always contact us for further explanation of how these events can affect your finances. To unsubscribe from our newsletters & website please email us with "unsubscribe" in the subject.