Market Insight

March Market Insight

As we approach the final weeks of Q1 2023, investors remain focused on many of the same variables that created the hurdles and volatility in 2022. But what created so much anxiety and worry last year is currently far less punitive. The vast knowledge gained from time and experience is causing less anxiety and has clearly reduced investor pessimism. While the Russian invasion of Ukraine does not show any signs of ending, the global fear exhibited one year ago is not as palpable and the economic consequences are not as dire. Global sourcing of energy and agricultural goods has greatly reduced the need for Russian goods as most of the world is finding alternatives and substitutes. Though inflation was made worse by the invasion, the Fed has made significant progress under difficult circumstances. While they will continue to raise rates modestly as inflation has not yet capitulated, considerable progress has been made to reduce inflation. We are much closer to the peak in short‐term rates while long‐rates seem to be range bound. Earnings remained solid in 2022 as the market corrected. As a consequence, valuations are reasonable given the interest rate environment. While first half 2023 earnings are likely to remain muted, second half earnings should show appreciable growth, with 2024 earnings looking much healthier.