Overview Against a backdrop of high inflation, rising rates, growing recession concerns and an acrimonious geo-political backdrop, the S&P 500 had its worst start to the year since 1962. The S&P 500 was down -20% through the first half of the year; the official edge of a bear market. This is not a particularly uncommon event and cannot be a surprise given the dramatic rise of the market since the Covid surge 2 years ago. [...]

Overview 2022 is shaping up to be close to what we outlined in our Outlook at the beginning of the year. The economy is returning to pre-covid levels, consumers are returning to travel and services, and corporations are still showing improved earnings. Market volatility has increased as we expected; we saw a -12% decline to begin the year, followed by an +11% rally in about 1 and a half weeks. Over the last 10 [...]

Overview 2022 should be the year of a full global recovery, an end to the pandemic, and a return to normal economic and market conditions that we had prior to the COVID-19 outbreak. We believe that an improved public health situation should result in a release of pent-up demand from consumers for travel and services, and from corporations for certain inventory and capital expenditures. The market should move higher, but returns are unlikely to match [...]

A battle between The Fed, Sentiment and Valuation One of the most important drivers, if not the pre-eminent force, propelling asset prices since the Great Financial Crisis has been Central Bank Policy, both here and abroad. The below chart outlines this notion quite dramatically. If current fiscal and monetary policies continue the path they have followed since March of last year, it’s hard to see a bear market evolving. However, we are seeing growing evidence [...]

The most important change in Fed Policy four decades In his press conference during March, Chairman Powell emphasized that monetary stimulus will remain until the labor market has achieved maximum employment and inflation is above their 2% target, for some period of time. Since Volcker broke the back of runaway inflation in the early 80’s by raising rates to 20%, the Fed has engaged in pre-emptive rate hikes based on their economic forecasts. Put simply, [...]