Three Minute Digest for July 15, 2022 | Affinity Capital

July 15, 2022

A “Noisy” Market

When we say there is noise in the markets, it implies that there is extra news and information swirling around the fundamentals of long-term investing principles. Not that these issues are not of significant importance, or that we are indifferent to their impact on our friends and neighbors, whether they are local or global. The “noise” is more about the confusion that is created by a very disjointed period that confuses the market. We have mentioned repeatedly in our market comments that uncertainty is worse than the unwelcome news itself.

Bad News, Good News

The bad news is that uncertainty abounds and the information that we do know is not favorable. The good news is that we have an exceedingly elevated level of cash in our portfolios. Cash is a most strategic investment tool for long-term investors as we endeavor to limit the downside of the markets and seek to strategically reinvest at opportune times.

As written in previous comments, while the ‘noise’ revolves around whether there will be a recession by the general technical definition of two consecutive quarters of negative GDP – Gross Domestic Product growth. Our position is to simply say that it looks, feels, and sounds like a recession so let us just make it official. And we know that inflation is official since we have forty-year high inflation numbers. So, what we have is the worst of both worlds and that is “stagflation.”

With the end of this second calendar quarter, we are entering “earnings season,” when publicly traded companies announce earnings as well as their outlook for business.

Our expectations going forward:

  • Corporate earnings will be lower
  • The outlook for business activity will be lower
  • The Federal Reserve will likely hike rates by 0.75% to 1.00% at the July meeting
  • Like a seesaw, as interest rates rise, the value of bonds go down.
    • We exited most bond positions last year and early this year
  • Gas prices may stabilize but will remain at significantly elevated levels
  • Supply chain issues will continue to impact the economy; however, companies have built up inventory just as inflation is causing consumers to cut back on spending
  • Issues such as the Russian invasion of Ukraine, Covid, and the mid-term election season will continue to affect the market going forward

So, what we refer to as noise in the markets is real and impactful, and it can distract investors from the principles of long-term investing such as well-balanced asset allocations, strategic versus emotional decisions and most importantly, patience.

While we hesitate to sign off with “Have a Great Day” after this less than bright Market Digest, we remind you that we believe we have weathered the storm well thus-far and with a high cash balance will work hard to continue to do so going forward. With the markets at historic high just last year, we have weathered war, oil embargos, terrorist attacks, a mortgage crisis and more.

As always, please feel free to call with any questions or to review your portfolios. Thank you for the opportunity to serve you.

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.