Brian Acker, president, CEO, and chief investment strategist at Acker Finley

FOCUS: North American large-cap stocks

MARKET OUTLOOK:

Since my last appearance, on April 12, the S&P 500 index has broken or had a negative transit of what we call EBV+5 or 4,208 on the S&P 500. The May 23 close of the same index, S&P 500 of 3,974, tells us the equity markets in the United States have entered into what we all know as a ‘bear market.’ Our calculation of EBV+5 transitions from what ‘technical analysts’ call ‘support (bottom)’ to ‘resistance (top)’ when the market transitions from bull to bear. And so, using Monday’s close of the S&P 500 creates a zone that has an upside of three per cent and a downside of 3,048 – EBV+4 or a fall of 28 per cent.

With inflation running ‘hot’ at 7-9 per cent per annum the Federal Reserve has turned ‘hawkish’, with ever-increasing interest rate hikes and what is known as ‘quantitative tightening’ of the Fed’s balance sheet. This ‘hawkish’ approach and tough talk about further increases in short-term interest rates have caused some asset prices to experience some breathtakingly large reductions in valuation. Crypto assets are an area that has caused a lot of pain for true believers sighting futuristic use of money on blockchain and distributed ledgers. Also, ‘story’ stocks have had punishing days where the ‘story’ doesn’t seem so bright when the Fed takes away the ‘punchbowl.’

As spring turns into summer, only the Fed knows when enough pain, is enough to substantially slow down inflation as the Fed possibly considers some ‘dovish’ language and potentially returning back to lower interest rates and ‘quantitative easing’ mode that produced increasing asset prices like in 2021. 

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TOP PICKS:

Walmart (WMT NYSE)

 Last purchase July 15, 2021 at $141.72 

Intel (INTC NASD)

Last purchase June 15, 2021 at $58.24

Johnson & Johnson (JNJ YSE)

Last purchase Nov. 11, 2021 at $163.52

PAST PICKS: May 8, 2020

Oracle (ORCL NYSE)

• Then: $53.57
• Now: $70.47
• Return: 32%
• Total Return: 36%

Merck & Co. (MRK NYSE)

• Then: $76.40
• Now: $93.65
• Return: 29%
• Total Return: 36%

Bank of America (BAC NYSE)

• Then: $23.57
• Now: $36.55
• Return: 55%
• Total Return: 62%

Total Return Average: 45%