January was the rebirth of growth investments. February was the reminder that inflation still stands front and center.
The S&P 500 ended the month of February down ~2% and after various inflation prints came in hotter than anticipated.
During last month’s newsletter, I mentioned the debate about whether January’s advances represented a tangible inflection point for markets to rise or simply just another bear-market rally.
It appears it was a Bear Market Rally. At this point in the game, the person in charge and at the helm is Federal Reserve Chair Jerome Powell. The markets are operating on his time and unfortunately, he only talks about a dozen times a year, mostly through FOMC meetings. The next meeting is March 21st. The more “hotter than expected” reports we get, the more likely that interest rate hikes will increase, either in size or number of hikes. In either case, the market would hit the blender button and we would see a pullback to levels like October 2022.
Right now, we want bad numbers. Good numbers mean that the Fed needs to do more. So, while wait, it appears we are stuck in a range.
With that said, as January proved, unexpected rallies can occur which is why we stay invested and wait for Chair Powell to pause rate hikes and create that inflection point for markets to climb higher.
We will keep our eyes on the market and as always, let you know if any changes are need.