AWA MARKET REVIEW

Align Wealth Advisors is pleased to provide our clients with a quarterly market review. It is our goal to empower our clients to realize balance between building wealth and living the life they desire. We urge our clients to review our update and contact us with any questions or concerns!

KEY MEASURES: 2nd Quarter 2022*

KEY MEASURES: 1st Quarter 2022*

KEY MEASURES: 3rd Quarter 2021*

ECONOMIC NEWS: 3rd Quarter 2021

Summary points from SEI Quarterly Market Commentary, Q3 2021

The global equity rally staged a modest retreat for the third quarter, with challenges accumulating as the clock ticked toward the final hours of September.

Developed-market equities were mixed for the period, while their emerging-market counterparts sank on deep losses from China and Brazil.

Vaccination rates have slowed in developed regions, leaving more shots available to the rest of the world. We therefore expect a rolling reopening of the global economy that will extend well into

We believe that analysts are still underestimating the earnings strength of publicly traded companies, which remains robust around the world. This could allow for upward revisions in earnings estimates—assuming that the renormalization of global economic growth gets back on track, as we suspect it will.

CONCLUSION: 3rd Quarter 2021

Conclusion from SEI Quarterly Market Commentary, Q3 2021

In a natural reaction to the prospect of more lockdowns and delayed returns to normal life given the surge in COVID-19 infections that began this past May, investors revisited stocks that benefited the most during 2020—namely the work-at-home, big technology companies and other large-cap stocks that do well when interest rates fall (lower interest rates make future cash flows of these types of stocks more attractive). However, the subsequent bounce-back in growth- and momentum-oriented large-cap stocks at the expense of value and cyclical stocks has already shown signs of deteriorating as rates spiked at the end of the third quarter.

We expect economic growth—in the U.S. and globally—to continue over the next year or two at a pace that meaningfully exceeds the sluggishness of the years that followed the 2007-to-2009 global financial crisis; the recent gloom about flagging economic growth is likely a bit overdone.

This lowering of the bar for next year could allow for upward revisions in analysts’ earnings estimates—assuming, as we do, that the renormalization of global economic growth gets back on track with wider vaccine distribution and a declining COVID-19 wave.

KEY MEASURES: 2nd Quarter 2021*

ECONOMIC NEWS: 2nd Quarter 2021

Summary points from SEI Quarterly Market Commentary, Q2 2021

Developed-market equities outpaced their emerging-market counterparts in the second quarter; U.S. shares gained the most among major markets, followed by Europe, the U.K., Hong Kong and mainland China. Japanese equities were slightly negative.

The world’s daily COVID-19 infection rate climbed to an all-time high at the end of April, while the daily number of virus-related deaths reported globally remained significantly below its early-year peak.

Vaccination rates have slowed in developed regions, leaving more shots available to the rest of the world. We therefore expect a rolling reopening of the global economy that will extend well into 2022; this should resemble an extended up-cycle that keeps the pressure on supply chains and leads to continued shortages of goods and labor.

CONCLUSION: 2nd Quarter 2021

Equity markets have long anticipated the economic improvement we now are watching unfold. There is increasing concern, however, that equity prices have risen so much that there is little appreciation potential left, even if the global economy continues to forge ahead into 2022.

The last several weeks have witnessed a partial unwinding of the rotation trade that began last autumn. So far, this appears to us as a temporary pause in a longer-term upswing. The global recovery and expansion have a long way to go, especially since many countries are still imposing lockdown measures to varying degrees.

We can’t rule out a choppier and more lackluster performance for U.S. equities in the months ahead given their strong outperformance since
March 2009 and elevated stock-market valuations relative to much of the rest of the world. We don’t think there’s reason to be overly concerned if stock-market volatility increases; corrections that range from 5% to 10% can occur without any fundamental reason.

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KEY MEASURES: 1st Quarter 2021*

ECONOMIC NEWS: 1st Quarter 2021

Summary points from SEI Quarterly Market Commentary, Q1 2021

Globally, the cyclically sensitive energy and financial equity sectors led at a distance for the second consecutive quarter, while defensive consumer staples had the only negative performance of the period.

President Biden signed an aid package totaling $1.9 trillion into law on March 11, and announced a $2.3 trillion package targeted at modernizing infrastructure and a range of other priorities on the last day of March.

Investors are anticipating the return to a more normal world. This is reflected in the rapid rise in bond yields, the most important change in the financial environment so far this year.

CONCLUSION: 1st Quarter 2021

Trying to outguess the market is often a losing game.  Current market prices offer an up-to-the minute snapshot of the aggregate expectations of market participants.  While unanticipated future events—surprises relative to those expectations—may trigger price changes in the future, the nature of these surprises cannot be known by investors today.  As a result, it is difficult, if not impossible, to systematically benefit from trying to identify mispriced securities.

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