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Podcast summary: Highway to the Danger Zone

LPL Financial strategists Ryan Detrick and Jeff Buchbinder share their latest thoughts on the warnings about the economy from Jamie Dimon and Elon Musk, review recent economic data and what it could mean for the outlook, and discuss the likelihood of a June swoon.

On the economy, the strategists caution against putting too much stock in an economic forecast from any corporate executive or so-called “expert” given the high degree of uncertainty right now. What might be coming and how bad it might get may be fun to talk about, but in this environment, anyone who is confident they know where this economy and inflation will be in a year is fooling themselves. Friday’s better-than-expected May jobs report underscored consumers’ relatively healthy financial position.

The strategists expect an economic slowdown, not a recession. The transition from a goods-driven economy to one more reliant on services may be bumpy, but the strategists believe growth in the services economy will enable the overall economy to avoid recession in the near term. Falling backlogs revealed in the latest Institute for Supply Management (ISM) surveys and news of China’s reopening indicate further easing of supply chain pressures, key to beginning to solve the inflation problem.

From a seasonal perspective, stocks have historically not fared very well in June, although June performance has been solidly positive over the past 10 years, up 1.4% on average. During midterm election years such as this one, however, stocks have on average fallen 1.8%. The strategists point out, however, that big up weeks such as the week ending May 27, when the S&P 500 Index rose 6.6%, tend to be followed by solid gains over the subsequent three, six, and 12 months.

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Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the U.S. and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel.

 

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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