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Note on Recent Market Volatility

Good evening!

Two months ago, we put a note together discussing the state of the markets. At the time, the Russian/Ukraine conflict was front and center on all our screens from a geopolitical standpoint, inflation was front and center along with the rise in interest rates and the price of oil. Now, the conflict in Europe (as we discussed in the note) is a slow grind. There doesn’t seem to be a finish line that we can see. We are looking at a long and protracted event unless something drastically changes (and really the only person who can have this impact is Vladimir Putin). Whether we have reached “peak” Inflation or not is still up for debate. Goldman Sachs came out with a note earlier this week believing we are past the worst of it (although it’s not something that just vanishes…it will just be “less bad” as we both get used to it and the numbers drop). Finally, the price of oil has remained range-bound over the last 60 days (trading at around $100/barrel). Perhaps you’ve even seen the price at the pump drop by a bit as well.

Equity markets up until yesterday (over the same time span…since the last note) were actually flat to slightly positive! That doesn’t mean there wasn’t any volatility, however. Strong up days followed by strong down days within the Nasdaq have felt like the norm over the last 2+ years (See Chart Below). There have been 10 days where gains were greater than 3% followed by days of loses greater than 4%. We’ve been here before. The S&P 500 has an average intra-year drawdown going back to 1950 of 13.6%. This is just around where we are right now. (Source: Michael Batnick, This Is Normal). It doesn’t FEEL good. But we’ve seen these volatility swings before, and not long ago. There are more to come, and we have positioned our portfolios in this vein.

It’s important to note, depending on your asset-mix you may be experiencing something different in your portfolio than what you read about in the headlines. You may not have much, if any, Nasdaq specific exposure (in our models we have minimal). You may have a portfolio more tilted away from the growth / tech stocks that inhabit that specific index.

How about some good news? Despite these clear headwinds, thus far first quarter earnings have come in better than expected. According to data from FactSet, as of April 29th, 55% of S&P 500 companies have reported results. Of those companies, 80% have delivered an EPS beat and 72% have delivered a revenue beat. The blended earnings growth rate (which includes actual results and expected results) for Q1 earnings is +7.1%, vs. the 4.7% analysts expected as of March 31. What’s more, FactSet estimates that were Amazon earnings excluded from the mix, earnings would be up 10.1% vs. Q1 2021. Long story short, earnings are solid and US corporations appear to be taking these various headwinds in stride.

In our last note, we ended with Where Do We Go From Here. Our Investment Committee had a long meeting yesterday and we were unable to find the catalyst for either inflation to go higher from here, and without upward catalyst could even subside; additionally, we could not see the necessary conditions to shift our stance on growth and call for a recession. Growth could slow – notwithstanding the surprise Q1 negative number due to (lack of) government spending and the inventory cycle – under the weight of higher rates, etc. However, we believe there is sufficient fundamental support to avoid a recession in the foreseeable future. We are watching this situation very closely.

Our best advice has not changed. Stay the course. We do not have any plans on making changes to our models given the current situation and we are comfortable with the amount of risk being taken within our portfolios. If you have specific questions, please reach out and we are happy to discuss in more detail.

Anfield Capital Management, LLC is a registered investment adviser with the SEC. The purpose of this communication is to provide general information, opinion, and outlook. All references to potential future developments or outcomes are strictly the views and opinions of Anfield Capital and in no way promise, guarantee, or seek to predict with any certainty what may or may not occur in global economies and investment markets. The contents of this report should not be relied upon in making investment decisions.

This information is provided “as is” and is not intended to represent the performance of an actual investment account. Information and data presented were obtained from sources considered reliable and correct; however, we cannot guarantee their accuracy or completeness.

We may change these materials at any time in the future without notice to you. We are not providing you with investment, tax, or legal advice. Past performance is not necessarily indicative of future performance. We are not offering to buy or sell any financial instrument or inviting you to participate in any trading strategy. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under US federal tax laws. Investments with Anfield are subject to significant risks, which include, but are not limited to, the risk of loss of principal, lack of diversification, volatility, and market disruptions. Prospective investors are referred to our Form ADV 2A for a more detailed discussion of risk factors, which can be (a) found on the SEC's Investment Adviser Public Disclosure website at:, or (b) provided upon request.

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