Vertex Capital Insights June 13, 2022

Michael Baker  00:05

Welcome back to Vertex Insights. Today is Monday, June 13. It definitely appears that the stock market is waking up on the wrong side of the bed yet again. This is a continued response from the selloff that began on Friday after the inflation numbers came out. 

Many people were hoping that these inflation numbers would show signs of cooling off. Unfortunately, they were disappointing for many, many people. Instead, it shows that inflation is remaining persistently high, and in some cases, ticking up a little bit higher. 

All eyes will now pivot to the Federal Reserve. The Federal Reserve has a meeting this week. We will see if they will continue on the 50 basis point rate hike trajectory or if they will decide to become more aggressive in light of this new information. 

The market is definitely expecting or at least anticipating a more aggressive tone, if not action from the Fed. Equities and other risk assets are repricing in this risk, which is why we're seeing the volatility to the downside. If you're an investor, especially if you are a long term investor, periods like these are never fun. It always feels like it is an acute pain that will not go away. 

However, remember, market rerating repricing of risk assets turnover market cycles are all part of the game. painful periods like this one are required to shake out people who have invested too risky for too long, bad businesses, companies with poor internal structure, bad business models and bad management. I wish there was something that could be said that would make us feel more comfortable at the moment. But alas, I have to say sometimes we have to be comfortable being uncomfortable. Stay the course.

02:04

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