August 2022: A Lesson in Positioning
“You know more than you think you know, just as you know less than you want to know.” – Oscar Wilde
The tricky summer for investors continues with July posting the best return in eighteen months. While there was some encouraging traction behind the peak inflation and Fed tightening narratives, as well as better than expected earnings, we suspect depressed sentiment and positioning may have played the biggest role. Macro uncertainty is still elevated, but we are encouraged by the recent progress. Nevertheless, the back half of the year will have plenty in store for investors.
June 2022: Finding Equilibrium
“The present is the ever-moving shadow that divides yesterday from tomorrow. In that lies hope. ” - Frank Lloyd Wright
Markets are trying to strike a fragile balance between hope that inflation is peaking and fear of a recession. Growth is slowing just as financial conditions tighten, but we suspect prolonged recessionary conditions can be avoided. Volatility has remained elevated, and investors are sure to remain on edge as the path to a soft landing is narrow.
May 2022: The Narrow Runway
“The trium can't be had without the struggle” - Wilma Rudolph
Interest rates around the world continue to move higher. Central banks are intently raising borrowing rates to help curb inflation, while geopolitical volatility and stubborn lockdowns are pressuring economic growth. Investors should keep their seat belt on as policy tightening into a slowing economy is tricky business; an anxious investor base is watching closely to see if they can stick the landing.
Previously in the Market
July 2022: Feeling the Heat
“The noblest pleasure is the joy of understanding.” - Leonardo Da Vinci
A tricky summer for the markets is underway. “Peak inflation” continues to be elusive, growth is slowing and macro ambiguities abound. While asset prices and depressed investor sentiment reflect the uncertainty, the ever-changing narratives and whipsaw patterns are playing with investors’ nerves.
September 2022: The Death of TINA?
“It's worth remembering that it is often the small steps, not the giant leaps, that bring about the most lasting change.” – Queen Elizabeth II
For the longest time, lower interest rates meant that, for most investors, There Is No Alternative (TINA) to stocks and like assets to meet long-term financial objectives. With yields backing up across the curve, risk-free rates have moved from an afterthought to a consideration and the bar for sustained outperformance has been set higher. While the new rate backdrop will make the recovery road bumpy, we do not think it is enough to short circuit growth.