Looking for Sunshine

April 28, 2022 | Greg Leonberger, FSA, EA, MAAA, FCA, Director of Research, Managing Partner

Here in Chicago, it has been a harsh spring. Below-average temperatures. Unrelenting rain. Snow flurries. Incessant clouds. Not the spring anyone was hoping for.

Investors would tell you the same thing, for different reasons. Stock market down 10% year to date.¹ Inflation at 8.5%, the highest in over 30 years. Bonds — the safe haven play in times of market volatility — down 9.5% year to date.² The ongoing conflict in Ukraine increasingly looks like a grinding war of attrition. Temporary yield curve inversion. Fed policy designed to slow inflation, though potentially at the expense of growth; either way, interest rates have more room to run. Not a lot of sunshine, indeed.

However, as April turns to May… hope springs eternal. Not all is lost for the year, and while most would agree that equity markets have not fully re-priced yet, there are hints — not unlike perennials sprouting each spring — that the worst of the market drop is behind us. Over time, markets have proven resilient and while the exact timing of market reversal is impossible to precisely call, one can look for signs of optimism. Here are some of the most compelling hints that we see.

In this edition:

• Inflation
• Yield curve inversion
• War-driven market volatility
• Earnings estimates
• Opportunities for active managers

Read > Looking for Sunshine

Watch our Q1 2022 Market Insights Video for an in-depth analysis of the first quarter’s performance by Marquette’s research team.

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.