Weekly Investment Update: January 9, 2022

January 9, 2023

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Key Events: Political chaos leads off the year 

After the longest stalemate since 1923, the House of Representatives finally elected a Speaker; a fractured GOP is expected to result in increased Washington gridlock.  

The minutes of the Federal Reserve’s December meeting revealed a couple of key items:  

  1. The markets are missing the Fed’s message: Inflation is here, and they will get it under control. 
  1. Exactly zero officials predicted rate cuts in 2023 

Market Review: Softening data provides relief.

Softening data on Friday gave the markets an excuse to rally.  The S&P 500 finished the week up 1.5% and most markets reported positive returns. Bonds and stocks both did well in this, the first week of 2023, in stark contrast to poor returns from both asset classes in 2022 year we’d all like to forget. 

Outlook: Disconnect between the market and the Fed 

Stocks rose unexpectedly when Hawkish Fed minutes were released and as expected when more subdued wage growth data was released. As we have discussed recently, day-to-day movements seem random; expect volatility until the path of interest rates becomes clearer. 

One source of optimism in light of this week’s congressional chaos is that the third year of the presidential cycle is one of the strongest.  The below chart shows that, since 1929, the third year has averaged 13.5%, while the average return of the first, second and fourth year is 5.7%.[1]

[1]Source: Bloomberg, OneAscent Investment Solutions

This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.

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Past performance may not be representative of future results.  All investments are subject to loss.  Forecasts regarding the market or economy are subject to a wide range of possible outcomes.  The views presented in this market update may prove to be inaccurate for a variety of factors.  These views are as of the date listed above and are subject to change based on changes in fundamental economic or market-related data.  Please contact your Financial Advisor in order to complete an updated risk assessment to ensure that your investment allocation is appropriate.