News and Quarterly Updates

Brief Market Update: Please take a few minutes to read some brief comments on the markets and the current economic recession indicators.

 BEAR MARKET RALLY FIZZLED: As we stated in our last market update, we expected the January rally to fizzle out, which occurred in dramatic fashion. The recent bank failures caused the market to drop over 5% in two days, which completed the wipeout of all the gains the market experienced in January. Our allocations to defensive strategies played out nicely, as our portfolios were up during this time and completely avoided the drop the market experienced. The Fed meets next week to discuss additional rate increases, which should cause additional volatility in the markets. We will remain defensive with our portfolio allocations as the risk of continued downside risk is still evident, but we anticipate there might be opportunities to swing back to partial “risk-on” allocations depending on market trends.

CPI MEETS EXPECTATIONS: The latest CPI number of 6% matched expectations and was slightly lower than the 6.4% reading we had last month. A week ago, most experts expected the Fed to increase rates by .50% in March, but those expectations have been revised down to 0.0%–.25% due to concerns with the banking system. The market will likely react more to the statements and projections the Fed releases after their meeting next week than to the actual rate increase, so we will be watching this closely.

LATEST ECONOMIC INDICATORS: As of February 28, there were no changes to the economic indicators (9: recession, 1: caution, 2: expansion). Job growth continues to remain strong, but the recent bank failures are starting to reveal cracks in the system, which historically have led to a recession. The possibility of a recession remains high, with the question now turning to how soon economic conditions deteriorate.

Below are the latest economic recession indicators as of February 28.

(The chart below shows the indicators in past recessions as a comparison.)