February 2023

Hope you all enjoyed the Super Bowl this past weekend! I was able to watch the game with friends and family and enjoy some especially tasty super nachos my wife made from (almost) scratch.  

My goal for these email newsletters is to keep each one of my valued clients apprised and informed about current happenings in the financial landscape. Read on for a high level overview of some valuable Q1 insights.

Yours truly,

Market Summary: Q1 Insights

From a portfolio perspective in Q1 2023, we are adapting to a landscape where we have potentially peaked on inflation, the dollar index, and 10-year treasury interest rates:

• With inflation and rates having pulled back from their recent peaks, we are unwinding inflation hedges and reallocating back toward a more neutral, strategic allocation. As such, we are reducing energy, commodities, and TIPS, back into stocks and bonds. 
• Currently, estimated earnings for U.S. companies is softening, while international earnings expectations are showing resilience – therefore, there is some preference for international vs. U.S. stocks. 
• In 2022, a more hawkish makeup of the Fed aggressively fought inflation. We are cautiously optimistic that they accomplished what they set out to do, as inflation has dropped almost 30% from its peak in June, with the future trajectory appearing to go in the same direction. The 2023 makeup of the Fed has more dovish voting members who may be more sympathetic to economic pain caused by financial tightening. An expectation for a shift in Fed policy, along with overly pessimistic market expectations, has us shifting risk slightly back into a modest overweight to equities. 
• Bonds may once again be a source of return and resilience. It’s important to remember that fixed income in a portfolio may reduce volatility and helps create ballast in the distribution phase of life – so that in the years when the market is negative, we can continue to fund your lifestyle with assets that are positive. While a more stable and softening interest rate environment may be more favorable for bonds, uncertainty lies ahead and we will continue to balance risk and reward in portfolio returns. 

I’m discussing these items and more in client meetings and, as always, I welcome you to reach out with any thoughts or questions about reaching your unique goals.

Take a Look at How Putting Us in Touch with Your Tax Advisor Can Help You Reach Your Goals

We are looking to elevate our relationships and deepen the value that we provide by working with your CPA or tax practice. By partnering together, we may have an opportunity to help you better strategically save for retirement, reduce your tax liability, manage your taxable income, strengthen your estate plan, and more.

Certus Wealth Management