One thing about the financial markets -
they never sit still.

The Financial Focus Newsletter is published quarterly to keep you informed on what’s happening with economic trends, current and international market conditions, personal financial planning, financial planning for businesses, as well as the current outlook on the housing market and more. Read newsletters from our archive below and discover how change was anticipated, perceived and responded to.

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No Man’s Land | 2022 – 3rd Quarter Report

The mixed, but weaker than expected cadence of economic data is highlighting both the strength and resiliency of the U.S. economy.


The Fed has raised interest rates at an unprecedented rate that is strangling the economy while strengthening the dollar and amplifying inflation internationally. With nearly three-quarters of 2022 in the books, it looks unlikely that stocks and bonds will stage a miraculous year-end turnaround to reach positive territory, given the aggressive projections for Fed rate hikes. The Fed’s plan to cool economic growth has put corporate earnings estimates on the chopping block. If earnings are resilient stocks would rebound nicely given their now-lower valuation. On the other hand, if corporate earnings weaken and reinforce the narrative of a deeper slowdown on the horizon, bond yields will likely decline (prices go up) as investors reallocate to bonds. The tide has changed as Federal Reserve Chairman Powell continues to reinforce his resolve on fighting inflation.


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The Black Swan | 2022 – 2nd Quarter Report

The S&P 500 just realized its worst first-half performance since 1970. High inflation and sharply rising interest rates combined with growing recession risks and extreme geopolitical uncertainty pushed stocks and bonds sharply lower through the first six months of the year. Those declines are understandable, considering inflation reached a 40-year high, the Federal Reserve raised interest rates at the fastest pace in decades, China (the world’s second-largest economy) effectively shut down, and the Russia-Ukraine war raged on. Frankly, the current market environment unequivocally qualifies as a black swan event. The current environment is rare indeed as this is one of the 20 largest drawdowns in the S&P 500 going back to 1961. Also, this is only the third time in the last hundred years that long-dated treasury bonds lost money as stocks slid in value.

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The Bull + The Black Swan | 2022 – 1st Quarter Report

Markets have been in a precarious position for the past several months, primarily due to uncertainty surrounding the March Federal Reserve policy meeting and lingering inflation concerns. Now, a black swan event emerged when Russia invaded Ukraine by ground and began shelling urban population centers by air. Although the Federal Reserve (the “Fed”) captured the market’s attention by raising interest rates for the first time since late 2018, the conflict in Ukraine is driving the narrative. The geopolitical instability in Eastern Europe touches many corners of the global economy, from commodities to shipping and supply chains. For example, commodities such as oil, natural gas, wheat, and fertilizer soared as many Western countries prepared for a future without these crucial Russian and Ukrainian exports.


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2021: The Outpace Odyssey | 2021 – 4th Quarter Report

The S&P 500 hit all-time highs again in the third quarter as investors looked past a resurgence of COVID-19 cases in the U.S. and instead focused on the positive combination of a resilient economic recovery, ongoing historic support from the Federal Reserve, and strong corporate earnings.

Market volatility notably picked up during the final weeks of September, reminding investors that the transition to a post-pandemic “new normal” isn’t always going to be smooth. We saw fear around the Delta variant and its potential to impact global economic growth, a possible debt crisis stemming from one of China’s largest real estate developers, and China’s crackdown on cryptocurrency in addition to its video game and casino industries. These events influence the direction of long-term trends, but focusing on corporate earnings is a stronger indicator of where markets are headed.


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A Peak of Volatility | 2021 – 3rd Quarter Report

The S&P 500 hit all-time highs again in the third quarter as investors looked past a resurgence of COVID-19 cases in the U.S. and instead focused on the positive combination of a resilient economic recovery, ongoing historic support from the Federal Reserve, and strong corporate earnings. Market volatility notably picked up during the final weeks of September, reminding investors that the transition to a post-pandemic “new normal” isn’t always going to be smooth. We saw fear around the Delta variant and its potential to impact global economic growth, a possible debt crisis stemming from one of China’s largest real estate developers, and China’s crackdown on cryptocurrency in addition to its video game and casino industries. These events influence the direction of long-term trends, but focusing on corporate earnings is a stronger indicator of where markets are headed.


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NO TWO RECOVERIES ARE THE SAME | 2021 – 2nd Quarter Report

In the second quarter of 2021, the three major indices regained the upward momentum that had begun to fade when investors became fearful of higher inflation and rising short-term interest rates. The S&P 500, Dow Jones Industrial Average (DJIA), and Nasdaq each hit all-time highs in Q2 as investors began reassessing the market risks associated with an economy possibly overheating. The markets are forward-looking and fluctuate based on evolving data, such as consumer prices trending higher. These are known risks for which we can strategically position when allocating portfolios. With economic forecasts, you can prepare for some volatility by crafting a portfolio based on economic cycles that diversifies risk by focusing on sectors. The crises that shake the market most – and sticks in the minds of investors – are the ones that went unforeseen. Trying to time the market based on fear and future Black Swan events will take you off the path towards long-term financial goals.


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FOLLOWING THE MONEY FLOWS | 2021 – 1st Quarter Report

At the end of the first quarter last year, investors were panic-stricken as the world was entering into lockdowns and uncertainty drove the markets into a historical sell-off. Yet, it didn’t take long for the markets to reverse course and enter a new bull market that has had many in disbelief (and some investors on the sidelines).

The first quarter of 2021 was not without its share of ups and downs as we saw the major indices again reach all-time highs amid a bull run that has sent the S&P up 72.37% since hitting the pandemic bottom. Despite the robust recovery in equities, new fears have emerged that have injected volatility into the markets. The optimism around an increasingly robust vaccination campaign gets tempered with expectations of an economy on the verge of overheating.

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THE YEAR OF THE VACCINE | 2020 – 4th Quarter Report

Happy New Year! We’ve run out of ways to describe 2020 and words fail to accurately depict the type of year it was. The year ended similarly to how it began, with added government restrictions in the Bay Area to keep the spread of the coronavirus from overwhelming our healthcare system as the number of new cases rises dramatically. However, instead of an environment rife with uncertainty we now have two FDA-approved vaccines with efficacy rates well above even the loftiest of expectations. The manufacturers have expressed confidence that the vaccines will hold up well against the new strain of the virus that has emerged. Our thoughts go out to all of those who’ve lost friends and family to this terrible virus and we’re so thankful that there’s an end finally in sight, where normal is just past the horizon. We still have months to go until the vaccines have been distributed through enough of the country for meaningful change, but even the prospect of regaining what we lost is enough to look forward to what we want to do and achieve in the new year.


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HANGING IN THERE | 2020 – 3rd Quarter Report

The state of the economy, markets, and most people can best be described as hanging in there. There are those who certainly have been able to thrive so far in 2020, but even then, there are obstacles and challenges that we must all overcome. This is true on an individual level as well as for the companies trying to clear the many hurdles that this year has presented. The third quarter saw a sharp rebound in economic activity, albeit not as robust as many were hoping as the virus still permeates every facet of society.


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THE QUARTER IN QUARANTINE | 2020 – 2nd Quarter Report

It’s remarkable just how much can happen in the world while you’re stuck inside. The second quarter started when we were just getting used to sheltering-in-place, with much uncertainty on just how long it would last. The quarter ends similarly, as the spread of COVID-19 has again worsened across the country after hasty openings exacerbated the crisis. Yet, the markets seemed to have shrugged off the current economic turmoil to recover much of the gains that were lost at the onset of the pandemic.


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COVID-19 SPECIAL EDITION | 2020 – 1st Quarter Report

Each quarter brings new challenges to navigate as we work with our clients toward their financial goals. It’s impossible to pinpoint a quarter that has had more turbulence and uncertainty. We started the year on the tailwinds of incredible performance in the stock market after equity indices ended 2019 at all time highs, but the first quarter of 2020 was anything but smooth sailing. The first sign of trouble to rattle investors’ resolve was a possible war with Iran after the killing of General Qasem Soleimani — which now seems like a distant memory especially after how global events further escalated in the quarter.


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A TALE OF TWO MARKETS | 2020 – 4th Quarter Report

2019 was the best year for U.S. equities in over six years. The Nasdaq led all indices with a 35.23% return. The S&P 500 (28.88%), Russell 2000 (23.72%), and the Dow Jones Industrial Average (22.34%) all saw impressive returns. A year ago these results would surprise many investors as 2019 started with investor sentiment crashing through the floor and with it, the markets. Many were more than uneasy about both an inverted yield curve and the projections set by the Federal Reserve to continue tightening monetary policy. Three planned rate hikes and a significant trimming of the Federal Reserve balance sheet fueled apprehension and in turn, volatility. The market turmoil set expectations that 2019 would be the beginning of the end of the bull run. Yet, as is often the case, things didn’t unravel as expected.


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OUTSMARTING YOUR AVERAGE BEAR | 2019 – 3rd Quarter Report

In the third quarter equity investors traveled a rocky road, to end up not too far from where we started.
We experienced a pullback in August of 6% in the S&P 500 index, and the mental and emotional durability of investors and their risk tolerance were once again tested. Fortunately, our clients and their portfolios were well prepared. Interest rates worked beautifully in tandem with equities, and balanced portfolios experienced much less volatility in the quarter as bond prices increased while equity prices went down, and vice versa.

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SUMMER’S SWINGS | 2019 – 2nd Quarter Report

Summer is in full swing and we hope you’re taking some time to unwind and relax. Just when we thought we’d seen it all, the second quarter of 2019 had no shortage of events that captured investors’ attention and rattled their confidence. Fresh off a stellar first quarter in which the Dow was up over 11%, that index then slid in May, ending down 5.5% over the first two months of the second quarter. In June the market rallied back to end the quarter up 2.6%. The first six months of 2019 was the best first half for the Dow in 20 years, coinciding with
the best June for the S&P 500 since 1955. The U.S. stock market is trying to make a sustained break out to a new higher trading level.


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Conflicting Signals | 2019 – 1st Quarter Report

With the fourth quarter of 2018 representing one of the market’s worst-performing quarters in roughly a century, 2019 started fraught with uncertainty and lacking direction. Confusion about the economy, politics, and interest rates culminated in relatively high volatility in global stocks as well as bond yields. Mixed corporate earnings and weak manufacturing data further fueled investor anxiety about the health of the world economy. Real GDP growth for Q4 2018 was recently revised downward to 2.2% from 2.6% previously, indicating GDP decelerated in every quarter during 2018.


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When Good News is Bad News | 2018 – 4th Quarter Report

The financial markets of 2018 can be summed up with one word, tumultuous. Stocks suffered their largest annual decline since 2008 with the Dow Industrials falling 5.6% and the S&P 500 down 6.2%. Multiple investment themes and cross currents drove stocks to all-time highs in the U.S. and back down to bear market lows. Since the beginning of October, we have seen many market prognosticators call for lower stock prices and a rising number of individual investors become more pessimistic as they say they feel in their gut that the market is going to go lower. With myriad political and economic developments in the final quarter, the angst felt by investors never had a moment to subside before the next bout of news shook the markets.

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Economic indicators are key | 2018 – 3rd Quarter Report

In the final quarter of 2018, we can begin reflecting on a year that has been full of world-shaking developments and, at the same time, surprised by market performance compared to expectations. From new developments in international trade wars to headline-dominating political news, market performance has been focused on corporate earnings and economic data. Investors are simultaneously on their toes and fatigued with the current political and market environment. We’ve reiterated in both our newsletters and podcasts, the fundamentals behind the economy…


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Pricing-in changing prices | 2018 – 2nd Quarter Report

The current economic expansion has been much longer and more drawn out than anyone would have anticipated, especially given the depth of the last recession. Corporate earnings have been extremely robust, the economy is effectively at full employment, housing price appreciation has pumped up household net worth and consumers are confident and keeping the economy humming. Yet, investors have been on edge all year as rising interest rates, trade wars, and geopolitical uncertainty shakes any overly-bullish sentiment from the markets…


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What not to fear | 2018 – 1st Quarter Report

a barrage of political news, rising geopolitical tensions, and markets that have given some investors heart palpitations, 2018 is off to a tempestuous start. Coming off a stellar year for the equity markets, strong economic tailwinds and the passage of massive tax cuts, investors were given an incentive to remain bullish and invest aggressively, pushing January’s S&P 500 return to 5.6%. The sharp rise seemed justified as the labor market continued to strengthen and economic activity across the board has been rising at a moderate rate. Market-based measures…


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How high is up? | 2017 – 4th Quarter Report

As 2017 was prosperous for many, we are reminded that not all saw the same benefit. Our thoughts are with the victims of record-breaking storms and flooding, fires, and mass shootings that occurred. We hope 2018 will be a year of recovery and better fortune. The only thing that seemed not too topsy-turvy in 2017 was the stock market. With the U.S. economy continuing to pick up steam and the global economy synchronized, equities were able to propel higher into new record territories. The current domestic expansion has been the 2nd longest on record. The U.S. isn’t the only economy that’s been a standout. According to Thomson Reuters data…


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Steady, as we grow? | 2017 – 3rd quarter Report

In the third quarter, the major U.S. indices hit all-time highs, multiple times as the economy continued to show signs of growth while investors were noticeably willing to shrug off rising tensions with North Korea and the damage inflicted by natural disasters. Kim Jong-Un’s continued provocations, including underground nuclear tests and an array of ballistic missile launches over Japan, only temporarily roiled international markets. Infrastructure rebuilding generally cancels out the adverse economic impact of natural disasters…


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Life is good | 2017 – 2nd Quarter Report

Political headlines dominated the news during the first half of 2017, casting shade on global economic data. Reflation trade (fiscal policy meant to expand domestic output) caused growth assets to outperform relative to fixed income, despite June’s bond rally. In the U.S. there is a recovery in business spending, as evidenced by the jump in factory orders and capital spending projects. Consumer confidence is also soaring. If history is a guide, this will translate into stronger consumption growth in the months head. U.S. inflation at the wholesale level fell for the first time in seven months, owing to lower costs for services as well as cheaper fuel for cars and homes. Earnings growth is finally gaining momentum…


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State of the Union | 2017 – 1st Quarter Report

Now that we have a President Trump and not the candidate, we’re seeing shifts in policy focuses that will change investment themes as his presidency progresses. We’re already seeing less of a focus on the populist messaging of improving infrastructure and widening health care coverage. His preliminary budget focus has been defense spending with very little attention to infrastructure. The American Health Care Act did nothing to expand coverage, yet was trumpeted by the president. These shifts are what will reorient the focus of investors as the Trump rally loses momentum and more of the agenda…


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