A Look Back at Q1
First, if you were bullish for 2023, congratulations! I am pleased to report that both stocks and bonds have rallied to start the year, which was unexpected considering how many times forecasters mentioned the word “Recession” coming into the 1st Quarter. The S&P 500 posted back-to-back quarterly gains, which has never happened in a bear market going back to 1950. This means that the market lows on Oct 12, 2022, could be the actual low point in this cycle. Corporate earnings, job creation, unemployment, and inflation have all been better than expected, which is great news.
However, we received unanticipated news in the first quarter as both Silicon Valley Bank in California and Signature Bank in New York failed, causing brief panic in the markets. While it’s possible we could see more small banks failures, we believe that the US cannot afford to have another financial crisis and will not allow a systemic financial crisis to happen again.
What we expect for the remainder of the year
Looking ahead, we believe that the Fed is very close to the end of its rate hiking cycle, and this is one reason why stocks and bonds have already begun to rally this year. Inflation is slowing from its peak of 9.1% last June, which is a positive sign. We still believe that the odds favor a mild recession by the end of 2023, and we have prepared accordingly for this in our model portfolios. We still favor high-quality stocks over low-quality and large companies over small ones. A mild recession usually lasts 8-9 months, and the market usually bottoms 3-4 months before we are out of the recession.
As always, it is important to note that there are many data points to analyze, and this data usually gets revised multiple times. We cannot predict with certainty when a recession will happen, but we are keeping a close eye on the markets and will make adjustments to the portfolios when we believe they are warranted.
Thank you for entrusting your investments to us. We remain committed to providing you with the best service possible, so if you have any questions or concerns, please do not hesitate to contact us.
Provista Wealth Advisors in Greenville, SC, provides peace of mind through personalized asset management, expert estate planning, and retirement planning. Navigate your financial journey with confidence. Rest Assured, We Have A Plan. Give us a call at (864) 696-2410 or send us a message to schedule your free introduction meeting.