The first quarter provided a welcome respite for investors versus the consistently negative returns we experienced in 2022. So far this year, virtually all asset classes have generated positive returns including domestic stocks, foreign stocks, bonds and even cash. Despite these good results, it’s not a time to get complacent: cracks have begun to emerge in the economy as rising rates, persistent inflation, shrinking liquidity and tighter credit markets have started to take their toll on both households and businesses. Turmoil in the banking sector (Silicon Valley Bank, etc.) has added to investor concerns.
Monetary policy remains front and center as the Federal Reserve attempts to fight inflation (still at 5-6%) without inducing a “hard landing” or risking further disruption in the financial system. Fed Chair Powell has made it clear that there will be “costs” to bring inflation down to its 2% target; it remains to be seen how expensive those costs will be.
Given the current crosswinds and level of uncertainty as to the timing and depth of an economic slowdown, we expect continued volatility in financial markets in the coming months. We remain disciplined in our investment approach: appropriate asset allocation, broad diversification and an emphasis on quality, non-speculative investments.
Follow the link below for more color on the 1st quarter economy and financial markets:
Please let us know if you have any questions or if we can do anything for you. We appreciate your support.
Matt and Andrew