After a strong rally in January, both equity and fixed income markets took it on the chin in February. The Core Large Cap Equity category returned -4.0% as the Federal Reserve’s monetary tightening policy drove concerns about a potential economic slowdown. On the fixed income side, ongoing inflation concerns pushed interest rates higher, dragging the Core Fixed Income category to a -2.8% return.
After a strong rally in January, both equity and fixed income markets took it on the chin in February. The Core Large Cap Equity category returned -4.0% as the Federal Reserve’s monetary tightening policy drove concerns about a potential economic slowdown. On the fixed income side, ongoing inflation concerns pushed interest rates higher, dragging the Core Fixed Income category to a -2.8% return.
Warren Buffett defended stock buybacks in Berkshire Hathaway’s annual letter, pushing back on those railing against the practice he believes benefits all shareholders.
The big question facing the Fed is whether they should increase the Fed Funds rate by 25bps or 50bps on March 22, 2023. If Jerome Powell cared for our advice, we would tell him to take the opposite approach of President Theodore Roosevelt. Speak loudly because your stick isn’t that big anymore.
In the wake of a challenging year, markets provided a respite for income investors in January. The Core Large Cap Equity category delivered a 9.2% rally, powered by a rebound in beaten-down technology stocks. On the fixed income side, signs of moderating inflation pushed down interest rates, driving the Core Fixed Income category to a 3.3% return.
Despite mounting evidence supporting recession forecasts, the stock market remains at odds with that outlook. Such leaves investors in a predicament of avoiding a further drawdown in the equity markets but not wanting to miss out on a potential recovery.
For months, investors have been scaling what feels like an endless wall of worry. Each concern that gets resolved seems to spawn new uncertainties, yet the market has continued its relentless climb higher.
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