April 2022 Tenjin Update

Published May. 05, 2022
April Market Outlook

Monthly Recap for April 2022

 

 

Update on TenjinAI Strategies

In our last monthly email, we highlighted that we improved TenjinAI strategies to automatically switch to a defensive mode or to a growth mode, based on unique signals that we developed to estimate the short-term market outlook. In March, we witnessed the advantages of these modifications, as the market recovered to return +3.58%, while the TenjinAI strategy performed even better, earning +4.69%. April turned out to be the worst month for the S&P 500 since 2020 and the worst month for the NASDAQ since 2008. The S&P 500 fell 8.8%. TenjinAI Cruiser Moderate strategy fell 6.5% in comparison. Similarly, the NASDAQ fell 13.24% in April. In comparison, our TenjinAI Cruiser Aggressive strategy fell 10.5% throughout the same time period. While we outperformed the comparable benchmarks for the second month in a row this year, TenjinAI is doing more to improve our absolute returns. We have made further changes to our investment strategies in order to protect investors’ capital even more effectively under severe market situations such as the one we experienced in April.

UPDATE ON THE US MARKET

Markets were beset by bouts of volatility as macroeconomic variables and ever-changing news influenced investors’ choices — the S&P 500 saw just eight sessions finish in the green during the month of April, and the first four months of the year registered one of the worst stocks performances since 1939, according to market statistics. When comparing the performance of the main stock indexes (Dow Jones Industrial Average, S&P 500, and NASDAQ), the NASDAQ has been the obvious under performer in 2022 and in April.

Technology firms, which account for a significant portion of the NASDAQ, are leading the decline, with popular names like Meta, Amazon, and Apple dropping ahead of results. The fall seems to be mostly due to investors avoiding high growth firms in an environment of increasing interest rates.

According to Lipper fund flows statistics, investors shunned equities, mutual funds and ETFs, redeeming $7.6 billion and $1.2 billion, respectively, during the week ending Wednesday, April 27. During this time period, the average stock fund (including ETFs) fell 6.17 percent, the worst one-week drop since March 2020.

UPDATE ON THE ECONOMY

A slew of macroeconomic concerns, including increasing interest rates, supply chain disruptions, protracted tensions between Russia and Ukraine, and inflationary pressures, continue to weigh on markets.

The Fed is moving aggressively to contain inflation. Today (May 4th) the Fed raised the target Fed Funds rate by 0.50%, to a range of 0.75% to 1.00%, the highest single increase since May 2000. Markets have priced in further rate increases through 2022. Constraints on the supply side continue to support consumer prices. The annual CPI came in at 8.5%, compared to the consensus prediction of 8.4%.

GDP declined 1.4% in the first quarter, compared to a 1% increase expected in the first quarter. This negative surprise was mostly caused by an increase in imports. This contraction sparked fears of a recession, which is characterized by two consecutive quarters of negative GDP growth.

China’s GDP falls short of expectations, owing to supply chain constraints. A fresh wave of COVID-19 wreaks havoc with supply networks, forcing China to repeat lockdown measures and shut down facilities. The most recent data from China show disappointing growth. The effect is undeniably seen in the United States, where investors are watching to see what influence China has on US firms and the larger economy.

Conclusion

 

While there are many uncertainties in the global economy and geopolitical situations as reflected by recent market volatility, we strongly believe investors should remain invested for long-term growth. And it is a great time to invest more and buy the dips if investors have any uninvested cash held in a low interest savings account.

The US market is expected to eventually recover and flourish again. Automated, advanced AI technology of Tenjin strategies are better suited to spring back to picking great investments for great returns. In the meantime, we intend to take all necessary steps to mitigate downside risks. TenjinAI’s actively managed strategies are continually changing with fresh stock/ETF choices and are automatically updated to Tenjin managed portfolios on a regular basis.

 

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Investment advisory services offered through Tenjin AI Capital Advisory LLC, an SEC Registered Investment adviser. The author’s commentary which may include information and statistical data obtained from and/or prepared by third party sources TenjinAI deems reliable but in no way does TenjinAI guarantee the accuracy or completeness. All such third party data information and statistical data contained here is subject to change without notice. Nothing herein constitutes as a legal advice or any recommendation that any security,investment portfolio or investment strategy is suitable for any specific person. All investments involve risks and past performance is no guarantee of future results. The content on the website is for informational purpose only and does not constitute a comprehensive description of TenjinAI’s investment advisory. For complete disclosures, please visit tenjin-ai.com/legal

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