Commentary

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.

It’s been quite a year so far between the global pandemic, global recession, fires raging on the West Coast, hurricanes on the East Coast, and a political circus in Washington unlike anything we have ever seen. With the pandemic still spreading, the president in recovery, and the election less than a month away, it still feels that we have a long way to go.

Global financial markets have staged a remarkable rebound from their depths in late March. A combination of deeply oversold conditions, extraordinary monetary and fiscal support from central banks and governments and hopes for an economic recovery as infection rates were curbed and businesses started to reopen, have all led to an impressive rebound in the prices of most risk-oriented assets during the second quarter.

Only three months ago, people were ringing in the new year and decade with a sense of cautious optimism. The U.S. economy was strong and the global economy seemed to be improving, especially on the heels of a trade agreement with China and new NAFTA deal with Mexico and Canada.