Strong economic data in January gave investors pause that inflation and interest rates are likely to be higher than previously anticipated. Which lead to a global decline in both stocks and bonds in February. For the month, US large-cap stocks were down (2.4%) and small-cap stocks were off (1.7%). International stocks also declined, with developed market stocks down (2.1%) and emerging market stocks off (6.5%). Core US bonds sold off on ongoing inflation and interest rate worries and were down (2.6%) for the month. In this month's commentary, we discuss the following investment topics:
- What Happens When a Bubble Bursts? We review the recent rally in speculative positions and what we believe happens next.
- Housing Outlook: We discuss the outlook for the national housing market and the impact of higher interest rates.
- Closing Thoughts: We comment on the uncertainty Fed policy is having on the financial markets and the impact on investors with short and long-term investment horizons.
Please give us a call if you have any questions regarding the attached presentation or would like to discuss your investment strategy.
