by | Aug 14, 2022 | Newsletters

Non-farm payrolls more than doubled expectations on Friday, August 5, 2022. The market had been expecting an increase in jobs of 250 thousand. Instead, data released showed a whopping increase of 528 thousand new jobs.

This news reversed the trends of various financial markets during the preceding weeks leading up to the job data. The S&P 500 had gained 6.60% since the previous jobs data last July 8th through to August 4. Gold gained 4.40% over the same period.

Investors in both assets had been considering that the Federal Reserve might loosen the speed with which they are tightening monetary policy. But such a surge in economic activity more likely means the Federal Reserve will need to tighten more quickly. The immediate reaction in the stock market sent the S&P 500 lower. Let’s say that was the knee-jerk reaction.

A chart displaying Sp500 growth in August 2022

Source: TradingView

However, the weeks ahead will determine if stock investors feel that the economy can withstand higher interest rates. And that the jobs created plus wage growth will be enough to drive an expanding economy.

July saw a host of earnings reports for some top companies. The list includes many heavyweights among the following:

  • JP Morgan
  • Morgan Stanley
  • Citi
  • United Health
  • Tesla
  • Netflix
  • Verizon

 

Reports were mixed but many tech stocks reported higher than expected earnings (except for Alphabet) as did airline stocks, helping to prop up sentiment across the board. Alphabet announced a 20 for 1 stock split and earnings missed the forecast.

Energy Collapse

Crude oil continued to tumble throughout July, where it started the month at $105.95 per barrel. During the first days of the month, this commodity managed a rally reaching a peak of $11.40 before starting a sell-off. The bear market took the price of WTI crude oil to its low on August 4, at $87.60.

Some respite came after the release of job data as the strong data indicated energy demand may remain high and helped crude oil recover some of its lost ground. Crude oil rallied for the rest of the afternoon to reach $90.48. 

However, a lot remains to be seen, as OPEC has agreed to increase production and that would reduce the bullish effects of demand. But many pundits are concerned that even though the club has agreed on production cuts, it may not mean they will be enforced. 

Bitcoin’s Return

Bitcoin has had a helter-skelter ride during July, as the largest cryptocurrency attempts to regain its foothold and surge forward. Bitcoin started the month at $19,985.62 and through various peaks and throughs managed to reach $23,307.44 on July 31. The 23,300 level is a psychological barrier, and the cryptocurrency has had a hard time managing to keep this level.

Some more good news emerged as the hedge fund Brevan Howard announced that its subsidiary NH Digital had secured a hefty $1 billion for crypto strategies. The fund had not already committed all its capital due to a lack of liquidity. However, they hope to be fully invested by September. 

Gold Holds its Ground

Gold was in a bear market for most of July where it reached a bottom at $1,680.20 on the 21st. Things have changed a lot since then and the shiny yellow metal has continued in rally mode since then. At the time of writing the price of gold per ounce was $1,775.86. Which equals an increase of 5.69% from its bottom in July.

Silver Makes a Come Back

Silver is one of those metals that is often overlooked yet holds many properties similar to those of gold. The precious metal had a relatively good month in July going from $18.16 on July 14th to reaching its close for July at $20.24. That run equals an increase of 25.25% and overall it was still up 2.2% for the month.

Wrapping Up

It has been a hectic month with inflation still soaring and gas prices still at all-time highs. Stocks managed to recover some lost ground and move out of recession territory. Although it still remains to be seen if that sentiment can last.

Given the troubling times and the recession worries which can often be self-propelling, it makes sense to add alternative assets to your portfolio. You can invest in alternative assets through a self-directed IRA to take advantage of a tax-enhanced environment. 

Whether you choose to contribute pre-tax dollars (traditional IRA) or contribute after-tax dollars (Roth IRA) you can watch your investments grow tax-free. We have filtered through the many companies that help you operate a self-directed IRA; you can read our reviews on them here.

 

Gino D'Alessio

Gino D'Alessio is a Broker/Dealer with over twenty years experience in various OTC markets such as Bonds, FX and Derivatives. Currently a Financial Markets and Investments Writer & Analyst