Midyear Outlook 2022: Navigating Turbulence

July 12, 2022

Tuesday, July 12th, 2022

Markets rarely give us clear skies, and there are always threats to watch for on the horizon. But the right preparation,
context, and support can help us navigate what lies ahead. So far, this year hasn’t seen a full-blown crisis like 2008-
2009 or 2020, but the ride has been very bumpy. We may not be flying into a storm, but there’s been plenty of
turbulence. How businesses, households, and central banks steer through the rough air will set the tone for markets
over the second half of 2022.

The sources of turbulence are clear. A global economy that was already vulnerable to inflation from supply chain
disruptions, tight labor markets, excess stimulus, and loose monetary policy came under more pressure when Russian
aggression in Ukraine added sharply rising commodity prices and Europe on the brink of recession to the mix. The
effects have included renewed pressure on interest rates, which hurt bond investors and contributed to tightening
financial conditions, and a much more aggressive stance by the Federal Reserve (Fed) and other global central banks.
Add in the typical market challenges of a midterm election year and the third year of a bull market, and it’s no surprise
it’s been a bumpy ride.

Understandably, rising prices, slowing economic growth, and a challenging first half for both stocks and bonds have
many investors on edge, and fatigue from more than two years of COVID-19 measures doesn’t make it any easier. But
the markets are always forward looking, so it’s important to remain focused on what lies ahead. There will most
certainly be challenges, but there are also some tailwinds from a strong job market, still resilient businesses, and the
likelihood that inflation will soon start to slow. Markets historically can even get a little lift from lower uncertainty
around elections as midterms approach.

Turbulence cannot be completely avoided, but it also need not deter us from making progress toward our financial
goals. LPL Research’s Midyear Outlook 2022: Navigating Turbulence is designed to help you assess conditions over
the second half of the year, alert you to the challenges that may still lie ahead, and help you find the smoothest path for
making continued progress toward your destination. When times are turbulent, the surest path toward progress remains
sound financial advice from dedicated professionals who have logged many hours in similar conditions.

Please contact our office with questions.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or
strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

Any economic forecasts set
forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot
be invested into directly.

Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges.

All performance
referenced is historical and is no guarantee of future results.

All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through
changes in the aggregate market value of 500 stocks representing all major industries.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This research material has been prepared by LPL Financial LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Insurance products are offered through LPL or its licensed affiliates.

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