Commentary

2022 was a tumultuous year marked by significant and adverse changes to geopolitical and economic conditions around the world. Among other things, these changes resulted in slowing economic growth and large declines across global financial markets. 

Current investor sentiment is quite negative and there is a long list of things to worry about including economic growth, high inflation, rising interest rates, shortages of energy and other commodities, ongoing supply chain disruptions, and a very dicey geopolitical environment.

The sell-off in financial markets accelerated in the second quarter reflecting rising concerns about inflation, interest rates, economic growth, and geopolitics.

So far, April showers have brought more showers than flowers in May. After a brief rebound during the last half of March, global financial markets have continued their relentless downpour, offering few hiding places other than cash, commodities, and gold.

2022 began on an optimistic note, with the hope that Covid would recede and life would start to return to normal. That didn’t last long. Sharply rising inflation data and interest rates soon spooked both bond and stock investors, sinking global financial markets.

2021 started with high hopes and then immediately disappointed. It was supposed to be the year that we brought sanity and competence back into Government, conquered Covid and returned to normal life.

“How much higher can things go?” is a question we hear frequently from clients, especially lately. It is also a question we have heard consistently over the last 30 years, usually as an expression of general nervousness about markets and current conditions.

Global risk assets including equities, real estate and industrial commodities continued their ascent higher in the second quarter, buoyed by a surging global economic recovery, continued progress against Covid, easy money, and lots and lots of fiscal stimulus.

The U.S. economy is currently experiencing a significant rebound, fueled by major progress in the pace of Covid vaccinations and a massive amount of fiscal stimulus.

In fairness to 2021, the new year was set to start off with a set of unreasonably high expectations that somehow all the problems that beset 2020 would magically disappear at the stroke of midnight on December 31st.