DoubleLine Podcasts

MMM Episode 72: A Red First Half for the Record Books

With the June 30 close of 1H2022, Jeff Mayberry and Samuel Lau start (2:21) by looking at the month, quarterly and first-half-of-2022 returns for the stock market. These left the S&P 500 down just under 20% for the first six months of the year. The best-performing sector for that period was Energy, up 31.8%; the worst performer, Consumer Discretionary, down 32½%. Investors learned the hard way that 60-40 stock bond portfolios offered no protection from the year’s pain. Putting things into perspective, Samuel Lau notes that a proxy constructed by Deutsch Bank (8:15) shows that the 10-year U.S. Treasury in 2022 had its worst first half of the year since 1788. Touring the fixed income landscape (10:38), Jeff and Sam observe the Bloomberg U.S. Bond Aggregate, the widely followed proxy for the high-grade domestic bond market, lost 10.4% in 1H2022, led by a 14.4% loss in investment-grade corporate credit. The podcast discussed (12:40) an almost 11% pullback in June in commodities as measured by the Bloomberg Commodity Index, although that benchmark holds a gain of 18% year-to-date.

In their review of macro news for the week of June 27-July 1 (15:52), the podcast hosts sought to temper people’s take on a hotter-than-expected 1.9% month-over-month gain in April by the S&P CoreLogic 20-City Home Price Index, bringing its YoY return to 21.2%. Jeff Mayberry points out that April excludes the subsequent run-up in mortgage rates. He cautions people to wait for the housing index’s May print. A June “wobble” in the ISM Manufacturing series (17:55) caught Mayberry’s eye. While still in expansionary territory, the ISM Manufacturing index came in at 53.0 versus expectations of 54½. Meanwhile, the new orders component of the index printed 49.2, the first time since the COVID-19 recession of 2020. The market week of July 5-9, although abbreviated, promises to be a charged with macro news (22:24). Reports due include May durable goods (final) on Tuesday; on Wednesday, ISM Services, JOLTS jobs, Federal Open Market Committee Meeting minutes; and Friday nonfarm payrolls and unemployment rates.

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