More concerns over US equities

By: Jeffrey Cohen, Investment Advisor Representative
US Advanced Computing Infrastructure, Inc.
​Chicago Quantum (SM) 

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Maybe it does not matter that the markets look to head lower today. Our personal investments are well hedged (~75%), and our new Chicago Quantum Net Score / Smart Volatility 'hedged' fund is 100% hedged against downside risks. However, we keep seeing warning signs in the data. Here are a few that indicate that we are in a bear market and it is likely that equities will keep falling.

Top 10 List:
10. Energy prices are up. WTI Oil is over $90 / barrel
9. Interest rates are up, and look to continue rising (long and short term rates)
8. Earnings season is coming and we see headwinds to profits, including the strong USD, rising inflation on inputs, rising interest rates on borrowings, and potentially slower consumer and B2B demand.
7. Variance of stock prices is elevated and continues to increase. Stocks are more risky by the week.
6. Stock prices keep falling
5. Market breadth is weak (many stocks falling and many new lows vs. stocks rising). 
4. Corporate bonds are weaker (absolute prices are down and in many cases, yield spreads are increasing).
3. US Bank equity 'cushions' are declining for banks that hold long-duration bond investments
2. The Federal Reserve is likely to continue raising interest rates & tightening the US money supply
1. Potential for war in Europe between NATO and Russia over Ukraine.

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We learned a valuable lesson in August, September and October in this market. It is similar to a lesson learned in January, February and March of this year.

Always hedge a new long position.

​GLTA