August 30, 2022


“Have we seen the bottom?” It’s one of the most common questions we’re getting right now about the market. Every percentage point we move away from our mid-June low makes it feel more likely that we won’t see those numbers again.

When we get this question, we like to joke that if we knew, we’d be on a beach somewhere. The truth is we just don’t know. Is this a bear market rally? Or was it the start of a new bull market? There are numerous factors at play that muddy the waters toward finding an answer. 

(You can also hear our advisors’ full take in Episode 116 of the Mach 1 Market Moment podcast.)


Inflation is still the 800-pound gorilla in the room. The Federal Reserve is trying, but there’s much work left to do to bring inflation under control. And their efforts bring even more uncertainty to the market. Federal Reserve Chair Jerome Powell’s recent comments on the central bank’s tough stance prompted both the Dow Jones and the S&P 500 to tumble more than three percent last Friday.

Inflation is likely here to stay for a while. We may be lucky if inflation is at five or six percent by the end of the year. And that’s still double what the Federal Reserve would like it to be. The pure definition of inflation is too much money chasing too few goods. We’re doing something about the money side, and the supply side will hopefully return to normal over the next few months, but probably not this quarter.


Let’s not forget the X factor in this equation. The post-pandemic world has created a lot of uncertainty in the market. Major governments around the world essentially froze their economies over the last couple of years. Now, everything is roaring back up and people are returning to work as usual. It’s a situation we’ve never had to deal with before, making it difficult to apply historical perspective. The reasoning of “the last time this happened” doesn’t work in our current state.


One of the interesting things to think about is if we did hit the low back in June, does that mean the market was wrong? It’s possible the market was pricing in a recession and looking six to nine months ahead. It may also have been factoring in some rough earnings this last quarter. But earnings ended up much better overall than what many had forecasted. Did the market get it wrong? Maybe, but right now it’s too early to tell.


So where does all of this leave us? Have we hit the bottom, or will we see a new low on the horizon? There are signs of hope. Gas prices have dropped over the last several weeks, and the labor market remains strong. But there are still many unknowns the market will have to find its way through before we have a green light for a bull market.

As always, the best advice we can give in uncertain times is to have a plan and stick with it. If you need help creating that plan, we’re here to help.

Catch the full conversation by subscribing to the Mach 1 Market Moment. We release new episodes every Tuesday.

Mach-1 Financial Group, LLC (“Mach-1”) is a SEC Registered Investment Adviser located in Bentonville, AR. Mach-1 may only transact business in those states in which it maintains a notice filing or qualifies for an exemption or exclusion from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. All investment strategies have the potential for profit or loss including the loss of principal. For full disclosures please visit https://mach-1financial.com/disclosures/.