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Kristal Insights - August 2022

Kristal Insights - August 2022

Global equity markets have staged a strong comeback since the middle of July on the back of strong labor market data from the US and what seems to be at least a slowdown in the trajectory of inflation. The US central bank remains committed to bring inflation back towards the 2% target and the probability of engineering a soft landing is gradually reduced as time progresses.

This environment is increasingly challenging for corporates, consumers and investors. Nominal growth is still healthy, but average households, especially those in Europe, are starting to feel the burden from inflationary pressures.

Equity markets have recovered strongly from their July lows, and when looking at the numbers, we are currently testing critical resistance levels. Historically, whenever the 50% retracement between the previous peak and low was crossed, the trend reversed from a bear to a bull market. Most major US indices are currently at or near that threshold.

In this current environment, asset allocation remains the key to resilient portfolios and returns in a time of increased volatility, and me and my team at Kristal will remain squarely focused on the same in the months ahead. Timing the market remains difficult, especially in times when even central bankers are shying away from committing to any forward guidance. Resilient strategies like dollar cost averaging and an active sector diversification can help us through the tail end of a turbulent summer.

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By

Kristal Advisors

August 25, 2022

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