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Monthly Market Commentary

April 2022 | Market Commentary

April 2022 | Market Commentary

April was a challenging month for equities as stocks declined. US growth stocks were amongst the worst performers (-13.6%), followed by US large-caps (-8.8%) and US small-caps (-7.8%). Bonds also struggled as investment grade corporates were down 6.7%, 7-10 year US Treasuries fell 4.2%, and high yield credits declined 4.2%. Commodities produced mixed returns as crude oil and broad-based commodities rose (+4.1% and +3.9%, respectively) while gold and silver fell (-2.1% and -8.0%, respectively).

March 2022 | Market Commentary

March 2022 | Market Commentary

The S&P 500 Index returned -4.6% during Q1 2022, and the MSCI All Country World Index fell -5.3%. Q1 saw a notable rotation into inflation sensitive assets. The Bloomberg Commodity Index was up 25.6%, the United States Oil Fund LP (USO) increased by 36.4%, and the Energy Select SPDR Fund (XLE) rose 39%.

February 2022 | Market Commentary

February 2022 | Market Commentary

On Thursday, February 24th, Russian President Vladimir Putin launched its invasion of Ukraine introducing a new uncertainty to markets. Globally, Russia makes up a small portion of the economy as its weight in the MSCI All Country World ETF (ACWI) is 0.21%. The exposure of US equities to Russia is small. According to JP Morgan Research, US companies have low direct exposure to both Russia (0.6% for Russell 1000) and Ukraine (0.1%). However, Europe is more exposed to the risks of the conflict as they are more economically linked with the countries.

January 2022 | Market Commentary

January 2022 | Market Commentary

At the FOMC meeting on Wednesday, January 26th, the Federal Reserve kept the federal funds rate at the 0-0.25% range and suggested tapering should end in March, but also indicated that it may soon be time to raise rates. As the Consumer Price Index (CPI) rose to its highest reading in 40 years of 7% in December from the prior year, the Fed seems ready to hike rates in order to combat inflation. “With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” read the statement from the FOMC. It is believed that the Fed is likely to raise rates by 25bps at the next FOMC meeting in March, which would mark the first interest rate hike since December 2018. Fed Chairman Jerome Powell also stated, “I think there’s quite a bit of room to raise interest rates without threatening the labor market,” causing many to think that this tightening cycle may be more aggressive with numerous rate hikes to come over the course of 2022.

December 2021 | Market Commentary

December 2021 | Market Commentary

The number one question coming from clients is how
to prepare portfolios for higher inflation. As communicated in our previous commentaries, we indicated that inflation would not be transitory. As a refresher, cyclically oriented sectors such as energy, materials, industrials, and financials have historically shown higher sensitivity to rising inflation. Energy stocks were the best performing sector in the US last year (refer to the second page). Additionally, commodities serve to provide additional protection as they tend to move at a different stage of the inflation cycle.

November 2021 | Market Commentary

November 2021 | Market Commentary

As the Omicron variant and inflation threats raised concerns for markets in November, US equities did not have a smooth month given the spike in volatility. Though the S&P 500 fell 1%, it outperformed small-caps and mid-caps which posted losses of 2% and 3%, respectively. As seen in the charts below, all sectors aside from Technology and Consumer Discretionary declined as Financials and Communication Services were the biggest laggards. Among factors, growth outperformed (+1%) followed by more defensive plays (quality -1%, low volatility -1%, dividend strategies -2%) while value trailed (down 3-4%).

October 2021 | Market Commentary

October 2021 | Market Commentary

The S&P 500 was up 6.9% for the month of October thanks to a strong earnings season. The S&P 500 outperformed US Small-Caps (Russell +4.2%), MSCI EAFE (3.2%), and MSCI EM (+1.1%). Tesla was up 43% in October and was responsible for 13% of the S&P 500’s October gains. Overall, it was a very risk-on month with stocks and commodities doing well while most fixed income sectors underperformed as government bond yields surged globally. See below for the month on month and year on year percentage changes for major asset classes.  

September 2021 | Market Commentary

September 2021 | Market Commentary

The Delta variant, originally discovered in India towards the end of last year, has recently caused an uptick in Covid cases around the world. Although the strain does not make people sicker, scientists are concerned because it is more contagious and can infect those who are fully vaccinated. According to the CDC, the Delta variant accounted for 83% of Covid cases in the US as of July 20th. As seen in the chart below, the total number of cases is still low relative to peak levels. However, many are still worried that mask mandates, social distancing requirements, and even quarantine measures may return, effectively slowing and endangering the economic resurgence.

August 2021 | Market Commentary

August 2021 | Market Commentary

The Delta variant, originally discovered in India towards the end of last year, has recently caused an uptick in Covid cases around the world. Although the strain does not make people sicker, scientists are concerned because it is more contagious and can infect those who are fully vaccinated. According to the CDC, the Delta variant accounted for 83% of Covid cases in the US as of July 20th. As seen in the chart below, the total number of cases is still low relative to peak levels. However, many are still worried that mask mandates, social distancing requirements, and even quarantine measures may return, effectively slowing and endangering the economic resurgence.

July 2021 | Market Commentary

July 2021 | Market Commentary

The Delta variant, originally discovered in India towards the end of last year, has recently caused an uptick in Covid cases around the world. Although the strain does not make people sicker, scientists are concerned because it is more contagious and can infect those who are fully vaccinated. According to the CDC, the Delta variant accounted for 83% of Covid cases in the US as of July 20th. As seen in the chart below, the total number of cases is still low relative to peak levels. However, many are still worried that mask mandates, social distancing requirements, and even quarantine measures may return, effectively slowing and endangering the economic resurgence.

June 2021 | Market Commentary

June 2021 | Market Commentary

Fed Turns Hawkish: Despite its pledge to avoid tightening financial conditions until the economy reaches maximum employment, the Federal Reserve signaled rate hikes may come sooner than previously expected in the June FOMC meeting. Fed Chair Powell acknowledged that inflation may come faster and last longer than anticipated. According to the updated dot plot projections, 7 of 18 committee members predict a possible rate increase in 2022. More notably, the forecast also indicated all but 5 committee members suggest the Fed will hike rates twice in 2023. 

May 2021 | Market Commentary

May 2021 | Market Commentary

Biden's Infrastructure Plan: Last week, President Biden unveiled his $6 trillion budget for 2022 in reference to his agenda and aspirations for the next decade. In addition to his $4 trillion American Jobs Plan and American Families Plan, Biden aims to reinvest in research and development, education, public health, clean energy, and the social safety net. The budget will also be used to enhance and improve infrastructure through updating highways, ports, bridges, and airports. 

April 2021 | Market Commentary

April 2021 | Market Commentary

April Performance: The S&P 500 Index was up 5% in April, driven by strong earnings and improving macro-economic data. Enthusiasm for stocks remains quite high with individual investors holding more equities than ever before, fueled by a blowout earnings season, the prospect of a strong economic recovery, and government stimulus. According to data from JP Morgan and the Federal Reserve, stock ownership among US households rose to 41% of their total financial assets in April, the highest level on record.

Game Stop Saga - Our Takeaways

Game Stop Saga - Our Takeaways

With all the hype around the recent GameStop saga and some of the questions we have already incurred, we wanted to address what happened and our thoughts and takeaways regarding this fascinating topic.  While it may not have meaningful impacts on the broad economy for now, it is an example of the potential excesses brewing under the hood.  Investors need to be aware of this risk and prepare rather than predict when it will end.

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