Uriel Loredo

Corrections

Market declines are part of investing; disciplined reactions can make the difference. Keys to staying on course when markets decline.

Perspective and Discipline During Volatility

Market declines are inevitable and often lead to impulsive decisions. However, history shows that corrections have been temporary and followed by recoveries. Maintaining a defined strategy, diversifying, and avoiding attempts to anticipate every market move can help protect long-term goals. Rather than eliminating volatility, the challenge is to manage it with perspective and discipline.

Time in the market is often more important than finding the perfect entry point. Leaving the market may mean missing some of the strongest recovery days. A diversified portfolio, including fixed income and regular contributions, can reduce volatility and support more rational decisions. During downturns, staying committed to the plan is often more effective than reacting to market noise.

Monitor

Source: Capital Group, Morningstar, RIMES, S&P.

Posted in Weekly Comment

Weekly Global Outlook 

Week of July 13–17

Lower inflation, corporate earnings, and uneven growth signals shaped the week.

Markets assessed the start of earnings season alongside easing inflation in the United States. However, geopolitical tensions and weaker activity and investment continue to create an uneven global economic environment.

United States

  • Inflation eased and the labor market remained resilient. Early corporate earnings exceeded expectations, although technology-sector volatility and geopolitical tensions weighed on markets.

Europe

  • Eurozone inflation continued to decline, but industrial production remained weak. The United Kingdom posted moderate growth, supported by the services sector.

Japan

  • Industrial production edged higher during the month but declined year over year due to weakness in machinery, pointing to a still-fragile recovery.

China

  • GDP growth slowed due to weak consumer spending and lower investment. Exports rebounded strongly, supported by demand related to artificial intelligence.

Argentina

  • Annual inflation increased, although the monthly pace moderated. Tourism, housing, and regulated services continued to drive price pressures.

Brazil

  • Retail sales and the services sector posted limited growth. Weakness in transportation confirmed a moderate economic activity environment.

Mexico

  • Formal employment and manufacturing payrolls continued to weaken, while private consumption remained resilient, supported by real wage growth, remittances, and low unemployment.

“Investing is the intersection of economics and psychology.”
— Phil Town

KEY UPCOMING EVENTS

  • In the United States, employment related data will be released 07/21
  • In the United States, manufacturing PMI will be released on 07/24

Monitor:

Note: Returns as of 10 AM ET.

Posted in Weekly Summary

Inflation

Lower energy prices eased inflation, but risks remain. Inflation slowed more than expected in June.

Inflation Eases, but Uncertainty Remains

Inflation in the United States surprised to the downside in June, easing to 3.5% year over year, down from 4.2% in May and below the 3.8% consensus forecast. On a monthly basis, the Consumer Price Index (CPI) declined 0.4%, marking its largest monthly drop since April 2020, driven primarily by lower energy prices. Meanwhile, core inflation eased to 2.6% year over year, also coming in below expectations. While these figures provide some relief for consumers and financial markets, the Federal Reserve will continue assessing whether this moderation proves sustainable.

The moderation in inflation eases the immediate pressure on the Federal Reserve, but it does not yet guarantee a shift in the path of interest rates. The 5.7% monthly decline in energy prices was the primary driver behind the improvement, while core inflation remained stable. Oil prices and developments in the Middle East conflict will be key factors in determining whether this trend can continue.

Source: U.S. Bureau of Labor Statistics

Posted in Weekly Comment

Global Weekly Outlook 

Week of July 6–10

Markets combined lower volatility with mixed signals on growth and inflation.

Markets remained relatively stable, although challenges related to inflation, international trade, and monetary policy persist. While the United States and Europe continue to show resilience across several indicators, Asia and Latin America face more specific economic headwinds.

United States

  • Markets posted modest gains despite continued volatility in oil prices. The Fed remains firmly data-dependent, while the trade deficit widened and services activity continued to lose momentum.

Europe

  • Consumer spending continues to recover and Germany’s external trade improved. However, higher producer prices indicate that inflationary pressures have not fully subsided.

Japan

  • Producer price inflation remains elevated, although the monthly pace of increase moderated, suggesting a gradual easing in cost pressures.

China

  • Consumer inflation continued to soften, while producer prices posted their strongest increase in several years, reflecting rising costs across the industrial sector.

Argentina

  • The government is seeking to secure debt financing through domestic and multilateral sources, prioritizing lower borrowing costs before returning to international capital markets.

Brazil

  • Inflation continued to moderate thanks to lower food and housing costs, although energy prices remain a significant source of inflationary pressure.

Mexico

  • Inflation fell to its lowest level since 2020, while investment showed signs of recovery. However, uncertainty surrounding trade relations with the United States continues to weigh on the automotive sector.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

— Robert Kiyosaki

Key Upcoming Events

  • In the United States, June inflation data will be released 07/14
  • In the United States, June PPI will be released 07/15

Monitor:

Note: Returns as of 10 AM ET

Posted in Weekly Summary

Earnings Season 

Technology leads revisions as markets anticipate another double-digit earnings quarter. Corporate earnings continue to surprise to the upside.

Q2 expectations point to another solid quarter

The second-quarter earnings season begins with stronger-than-usual expectations. Following a first quarter in which nearly 85% of S&P 500 companies exceeded earnings estimates, analysts have revised their Q2 forecasts upward, an uncommon trend at this stage of the quarter. Currently, S&P 500 earnings are expected to grow by more than 23% year over year in Q2, while revenue is projected to increase by more than 12%, driven primarily by the energy and technology sectors. Looking ahead, consensus expectations call for approximately 24.1% earnings growth for full-year 2026.

Corporate earnings growth continues to be led by the technology sector, where earnings revisions and positive corporate guidance have reached multi-year highs. While other sectors, such as energy, benefited during the second quarter from higher oil prices, digitalization, artificial intelligence, and demand for technology infrastructure have become the primary drivers of margin expansion and profit growth across the U.S. equity market.

Monitor

Source: FactSet

Posted in Weekly Comment

Weekly Global Overview 

Week of June 29 to July 3

Global growth continues to show mixed signals between resilient consumption and moderating economic activity.

Markets entered July with lighter trading activity due to the U.S. Independence Day holiday, while economic indicators pointed to a gradual slowdown in global growth. Consumption remains resilient across several regions, although challenges related to trade, manufacturing, and industrial activity persist.

United States

  • Markets ended the week on a positive note despite signs of moderation in labor markets and manufacturing activity. Consumption remains solid, although the trade deficit reached its highest level in more than a year.

Europe

  • Inflation continues to moderate thanks to lower energy costs. Consumption remains resilient, although signs of industrial weakness and slower growth in the United Kingdom persist.

Japan

  • Retail sales surprised to the upside, supported by wage growth, while industrial production continues a gradual, albeit fragile, recovery.

China

  • The manufacturing PMI recorded its third consecutive month of expansion, driven by technology exports and artificial intelligence-related demand, despite weak domestic consumption.

Argentina

  • Economic activity continues to post positive annual growth, albeit at a slower pace, supported by agriculture and mining.

Brazil

  • Producer prices faced less pressure due to lower food and mining costs, partially offsetting increases in other industrial sectors.

Mexico

  • Manufacturing activity and remittances continue to support economic growth, while concerns over trade and tax revenue collection are increasing.

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” — Albert Einstein

KEY UPCOMING EVENTS

  • In the United States, the Services PMI will be released on 07/06
  • In the United States, employment-related data will be released on 07/09

Monitor:

Note: Returns as of July 2 at closing

Posted in Weekly Summary

Artificial Intelligence

Artificial intelligence is redefining tasks, processes, and opportunities. AI will transform industries, but human talent will remain essential.

How AI Is Changing the Way We Work

Artificial intelligence is beginning to transform the way we work by automating repetitive tasks and accelerating processes. However, history shows that major technological innovations tend to create new opportunities rather than eliminate jobs on a large scale. The adoption of these tools is likely to be gradual and uneven across industries, especially in sectors where judgment, creativity, and human experience remain essential to decision-making.

The impact of AI will likely be more evolutionary than disruptive to human work. Organizations that successfully integrate technology with processes and talent stand to benefit the most. Rather than eliminating jobs, AI may redefine skills, create new roles, and increase productivity, particularly in administrative functions, information analysis, and routine process automation.

Monitor

Source: Capital Group, Bureau of Labor Statistics

Posted in Weekly Comment

Hedge Funds 

An introduction to a strategy focused on flexibility and risk management. Understanding the role of hedge funds in a portfolio.

How They Seek Returns Across Different Market Environments

Hedge funds are investment vehicles designed to generate returns through a wide range of strategies, going beyond simply buying stocks or bonds. Unlike traditional investments, they can capitalize on opportunities in both rising and falling markets through relative value, macro, credit, and arbitrage strategies. Their primary objective is to provide diversification and reduce dependence on overall market direction. In an environment characterized by heightened volatility and economic uncertainty, hedge funds continue to be a relevant investment tool.

One of the defining characteristics of hedge funds is their flexibility to adapt to different market environments. However, not all strategies perform the same way, and results often depend heavily on manager skill. Today, investors are showing greater interest in strategies focused on risk management and capital preservation, while manager selection and diversification across strategies remain key factors in building more resilient portfolios.

Hedge Funds performance

Source: Preqin, S&P Capital IQ, MSCI, Bloomberg, Federal Reserve

Posted in Weekly Comment

Markets Between Monetary Caution and Slowing Growth 

Weekly Global Outlook

Week of June 15–19

Central banks remain cautious as the global economy shows diverging signals

The week was marked by monetary policy decisions, persistent inflationary pressures, and mixed growth signals. While some central banks maintained a cautious stance, economic activity reflected contrasting trends across regions as investors continued to monitor interest rate and inflation developments.

United States

The Fed kept rates unchanged at 3.5%–3.75%, removed its easing bias, and projected a median policy rate of 3.8% for 2026. Consumer spending surprised to the upside, while housing and manufacturing showed weakness.

Europe

The Bank of England held rates at 3.75%, and Eurozone inflation remained at 3.2%. Germany showed improving economic sentiment, although the construction sector remains under pressure.

Japan

The BoJ raised its policy rate to 1.0%, the highest level since 1995. Inflation increased modestly, while exports rose 17%, driven by semiconductors and AI-related technology.

China

Consumer activity showed signs of weakness, with declines in retail sales and urban investment. However, industrial production and labor market indicators pointed to greater stability.

Argentina

Consumer confidence rose 6.4% in June, supported by improved expectations and a recovery in sentiment toward durable goods and real estate.

Brazil

Brazil’s central bank lowered its policy rate to 14.25% but warned that inflation remains a key risk. Retail sales declined, reflecting softer economic activity.

Mexico

Mexico, the United States, and Canada will formally begin the USMCA review process on July 1, marking a key step for North American economic integration.

“If a business does well, the stock eventually follows.” — Warren Buffett

Key Upcoming Events

  • In the United States, employment related data will be released 06/23
  • In the United States, Q1 final growth data will be released 06/25

Monitor:

Note: Returns as of June 18th at closing.

Posted in Weekly Summary

Fed: Fewer Cuts, More Caution 

The Fed holds rates steady but now signals possible hikes. Understanding the Federal Reserve’s new message.

What Changed in the Federal Reserve’s Latest Meeting

The Federal Reserve left interest rates unchanged at a range of 3.50%–3.75%, but its message to markets shifted significantly. For the first time since 2025, policymakers removed expectations for rate cuts in 2026 and instead signaled that a rate increase could be possible before year-end. The median projection from Fed officials now places the federal funds rate at 3.8% by the end of 2026, above the current range and indicative of a more restrictive stance. This shift reflects inflation that remains above the Fed’s 2% target and a labor market that continues to show resilience. The meeting also marked the beginning of a new era under Chairman Kevin Warsh, who has expressed a preference for simplifying Fed communications and reducing reliance on forward guidance.

Beyond the decision to keep rates unchanged, the most important development was the shift in tone. The Fed raised its 2026 inflation forecast to 3.6% for headline and 3.3% for core, while slightly lowering its economic growth projection to 2.2%. In addition, the median projection for the federal funds rate increased from 3.4% to 3.8% for year-end 2026, eliminating expectations for rate cuts and leaving the door open for a potential hike. With inflation still elevated and the labor market remaining resilient, policymakers continue to take a cautious approach toward monetary easing.

Monitor

Source: Federal Reserve

Posted in Weekly Comment
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