George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
Now that individual taxpayers have submitted their 2022 tax returns and Tax Day 2023 is in the rearview mirror, a largely self-made crisis surrounding raising the debt ceiling will begin to resonate through the halls of Congress, possibly lasting through the summer months.
This week marks the start of earnings season and investors are anxiously awaiting corporate guidance to shed light on the state of the economy. The first quarter of 2023 brought positive returns for both stocks and bonds, but we also saw the second and third largest bank failures in U.S. history. Mixed signals like this are difficult for investors to reconcile, however, this week was rich with economic data to set the stage for the second quarter of 2023.
In a 1981 interview, a skeptical Todd Koeppel questioned 26-year-old Steve Jobs about the dangers of using computers and whether they would eventually be able to control humans (aside from current social media addiction, not yet). Jobs proceeded to explain that the personal computer is the “bicycle of the 21st century” and referred to a study that measured the locomotion efficiency of various species.
As the first quarter of 2023 wrapped up this week, investors may be surprised to see both stocks and bonds with positive returns, given the ongoing stress within the banking industry and the signs that the Fed’s aggressive interest rate hikes are creating cracks within the economy.
One year ago this week, the Federal Reserve raised interest rates for the first time since the pandemic began. After two years of holding rates near zero, this first hike to combat rising inflation only raised the policy rate by a mere 0.25%.
That a notable Silicon Valley bank failure could overshadow significant developments in the labor market is a testament to how attuned investors remain to the unpredictable consequences of the Fed’s ongoing campaign to raise interest rates.
To both economists and investors, one of the biggest surprises to begin 2023 has been the resilience of the economy, and in particular the labor market. Coming off the back of the most rapid Federal Reserve tightening cycle in decades, many assumed that economic data would prove recessionary as soon as the calendar flipped. While leading indicators still point to a slowing in the economy ahead, recession still seems a ways away.
We are expecting inflation to cool as we move throughout 2023, but we also know that it won’t move in a straight line. The Fed’s favored inflation index is called the personal consumer expenditures index (PCE).
This week, a slew of economic reports, which included inflation data, employment figures and retail sales reports, continue to indicate that the Fed still has a way to go on its quest to tame inflation.
President Biden held his State of the Union Address this week, and while there was a laundry list of proposals, the two that we believe are on investors’ minds are the debt ceiling and the Medicare drug price negotiation.
While we continue to see a daily deluge of headlines highlighting layoffs in the tech space, the rest of U.S. labor market appears fairly resilient. This morning, the Department of Labor released the monthly jobs report and what was quite unexpected was the gain of over 500,000 new jobs. This brought the unemployment rate down to 3.4%, the lowest since May of 1969.
It is no surprise that all eyes are focused on the economic headlines – investors and consumers are searching for tangible pieces of information to guide decision-making and create a logical roadmap for 2023. You don’t need to look far to see the latest news plastered across the media: corporate layoffs.
Bonds made headlines last year for all the wrong reasons. Spurred by dramatic interest rate increases from the Federal Reserve, the U.S. bond market posted its worst annual performance in modern history. As a result of last year’s sell-off in bonds, bond yields have reset to higher levels not seen in over a decade.
Yesterday, we hosted our annual Investment Outlook webinar where we discussed the key themes impacting capital markets and client portfolios in 2023. As we begin the new year, investors remain focused on the Federal Reserve’s inflation-fighting crusade leading us to our title of this year’s outlook, “Slaying the Dragon.”
After being caught flat-footed by inflation last year, the Federal Reserve maintains a steely resolve to ensure that the beginnings of slowing inflation witnessed last fall continue in 2023. Following the stock market’s worst year since 2008 and the worst year ever for bonds, investors are hoping for better days in 2023.
One topic we are consistently asked about is the risk of another housing crisis. Housing is clearly softening in the wake of the increases in interest rates, causing mortgage rates to climb sharply this year and making home ownership unaffordable for many Americans.
It has been a very challenging year for the capital markets. Not only have stocks entered a bear market, but bonds are on pace to have their worst return in more than a century. Typically, bonds have a negative correlation with stocks, and, as such, tend to have strong returns when stocks decline. However, this is the first time in 52 years that stocks and bonds fell in the same year.
This week, all eyes were on the inflation report and the subsequent Federal Reserve announcement a day later. Since these were the last announcements of their kind for 2022, market participants were paying close attention, with the hope of gaining some insight into what the rest of the year might look like for markets.
As investors handicap the most anticipated recession in history, fourth quarter equity returns are playing out as expected. Historically, the fourth quarter, specifically the month of December, delivers the best results for equity investors. While this quarter has continued the positive trend, December is not acting as planned.
Jerome Powell has the most difficult job in America. The Fed Chairman and the Federal Reserve Open Market Committee are tasked with lowering inflation and they primarily have only one blunt tool to accomplish this goal, adjusting interest rates.
