May 10, 2022—Weakness in the stock market has been acute. Over the past few weeks, there have been times when it seems that investors can’t find the exit fast enough. The CBOE Volatility Index has spiked again to around 35, indicating the options market expects heightened volatility. (The average reading on the VIX for 2021 was below 20.) But the S&P 500 index has now corrected 16.
May 2, 2022—Inflation risk is to the downside for the first time in more than a year and the Federal Reserve (Fed) is likely to hike less than the current market pricing of 10 more hikes (+2.5%) this year. Price pressures were already set to ebb of their own accord even before the Fed set out on a path to tighten financial conditions. The Fed has only hiked once, by 0.
March 25, 2022 — An important discipline in our investment work is portfolio risk management. This can mean adjusting position sizes of securities, adding portfolio hedges, or recognizing that the market is not appropriately pricing risks to the upside or downside. There is no question that economic risks have risen significantly in recent weeks, yet the S&P 500 is less than 6% below its all-time high.