Three Minute Digest for February 5, 2022 | Affinity Capital

April 21, 2022

Markets were higher for the week, as the Dow Jones Industrial Average was up 1.1%, the S&P 500 gained 1.6%, and the Nasdaq Composite jumped 2.4%. … even with a very volatile and scary Thursday for tech stocks.

The technology-heavy NASDAQ fell (3.7%) on Thursday in its largest one-day declines since September 2020. The S&P 500 lost (2.4%,) the Dow Jones Industrial Average fell by (1.5%). Facebook parent Meta lost $252 billion in market value, the biggest one-day value drop in stock market history, after weaker-than-expected user growth and revenue reports. Several other companies have missed revenue or earnings estimates, revised down future earnings estimates, and/or cited compressed margins due to higher labor costs.

Three Thoughts for the Markets:

  1. Corporate Earnings Will Be Challenging

Companies’ future earnings forecasts are not as strong as they had been, and fewer companies are beating earnings estimates.

  1. Bonds and Interest Rate Sensitive Securities

Federal Reserve is likely to begin rate hikes in March

With inflation at its highest level in decades. The Fed has signaled, and the markets expect rates hikes in the overnight Fed Funds Rate. This rate is a bellwether for interest rates in general. Interest rates for consumer loans, such as auto loans and business loans, may rise as the Fed hikes rates. Loans tied to short-term interest rates—like auto loans or credit cards—tend to be more sensitive to changes in the fed funds rate than mortgage rates, which are tied to long-term Treasury yields.

  1. Stock and Bond Markets will be More Volatile

We believe volatility is here to stay for each quarterly earnings season and through the mid-term elections in November. The Russia / Ukraine situation is certainly a potential catalyst for event-driven market volatility. We believe that Russia would not act during the Olympic Games now beginning in China. While Russia covets Ukraine and China claims Taiwan, they see common ground in cooperation. China views the Games as an important bridge in building international relationships and Russia would not likely disrupt an international high point for their neighbor and increasingly friendly ally. But … it’s a coin toss.

Market volatility is unsettling, but historically not unusual at all. Most attempts to time the markets for long-term investors is difficult at best and history tells us that common-sense portfolio management is key. We sold numerous positions earlier in January including a tech heavy fund. Our portfolios average 12% in cash which we believe will serve us well in seeking opportunities during this ongoing volatility. We have been positioning our portfolios for higher rates and greater volatility through much of 2021.

Finally, Ignore the Noise! The TV news will shout twice as loud over a 100-point drop as they will a 200-point gain. Don’t misunderstand, we know that a loss in your portfolio is not “noise,” but we also understand that over time, volatility helps us to also enjoy our gains.

As always, please feel free to call with any questions.

 

Signals from the Fed: Inflation, Growth, and What Comes Next

August 22, 2025
It was a Fed-heavy week, with three major developments that matter for markets and the economy. FOMC minutes (July 29–30) — released Wednesday (Aug. 20). The minutes reinforced a data-dependent stance : participants saw continued progress on inflation but noted that risks aren’t one-way, citing pockets of labor-market cooling and the growth impact of tighter financial conditions. Policymakers emphasized flexibility and the need to see inflation moving durably toward 2% before declaring victory. For investors, the takeaway is that the bar for rapid policy shifts remains high, but the Committee is clearly keeping both sides of the mandate in view. Weekly balance sheet (H.4.1) — released Thursday (Aug. 21). The Fed’s weekly statement showed the usual moving pieces: securities holdings, reserve balances, and program usage. While week-to-week changes can be noisy, the release remains a useful pulse on system liquidity and the runoff of the Fed’s portfolio under quantitative tightening . Markets watch aggregate reserves and Treasury General Account flows because they can nudge front-end rates and funding conditions at the margin. Jackson Hole — Chair Powell’s Friday address. At the Kansas City Fed’s annual symposium, Chair Powell underscored that policy decisions will continue to be guided by incoming data . He highlighted the balance between sustaining expansion and finishing the job on inflation , noting tariff-related price pressures and supply-chain considerations among factors being monitored. The message: no preset path, but openness to adjust as evidence accumulates. Historically, Jackson Hole is more about long-term framework and risk management than near-term moves, and that tone held this year. What it means for the days ahead Near-term market drivers will be how inflation and labor data align with the Fed’s “proceed carefully” posture. • If inflation continues to edge lower while growth holds steady, the door stays open to gradual policy easing later this year. • If price pressures re-accelerate—or if hiring slows more sharply than expected—the Fed may extend its wait-and-see approach. Liquidity dynamics from the Fed’s balance sheet runoff will remain a background factor , but the central story is still inflation’s glide path and the durability of demand . Investors should expect choppy trading around key data releases , with markets pricing probabilities rather than certainties. As always, we welcome your questions and are here to support you . At the heart of everything we do is our commitment to “ Wealth Management for Life ”—providing enduring guidance for you and your family’s financial success.

Fed Moves and Market Trends | Affinity Capital

August 6, 2025
Markets entered the week with a boost of optimism, fueled by softer labor data and growing chatter that the Federal Reserve might be leaning toward a rate cut this fall. But that optimism didn’t last long . As the week unfolded, economic uncertainty returned to center stage: fresh concerns about tariffs, underwhelming corporate earnings in some sectors, and signs of consumer fatigue in key parts of the economy tempered the early enthusiasm.

Weekly Market Update: Stability Amid Data and Tariff Jitters | Affinity Capital

July 17, 2025
This week’s stock markets were marked by tight trading ranges, record-setting highs in tech, and a backdrop of macro uncertainty. The S&P 500 (through SPY), Nasdaq (QQQ), and Dow (DIA) eked out modest gains, shrugging off headline volatility tied to Fed independence concerns and escalating tariff threats.