Is Spring really here? One of my friends back home in Ely said he was ice fishing in front of my mom’s home and had to auger through over 40 inches of ice last week. As we know, Minnesotans don’t like when winter drags on and wall street doesn’t like uncertainty.
There are a host of issues that markets are grappling with at the moment – the war in Ukraine continues, Covid related lockdowns in China is creating fears of a global slowdown, and inflation persists at multi-decade highs. Last week, the Federal Reserve chairman tried to clarify the Fed’s next move by stating that raising rates by half a percentage point is “on the table” – emphasizing the Fed’s stance to bring inflation under control. As the easy money policies of the Covid era are disappearing, the rally we saw in March from those lows quickly evaporated. Uncertainty and renewed worries about the economy in the US have taken hold. As markets try to absorb these headwinds we have seen another selloff that is testing lows from earlier this year. While not that surprising based on the global economic environment, it is never a comfortable place to be as an investor.
As you would hope, we have continued to be defensive and look for opportunities to protect your capital. In late March, we took the opportunity to purchase 3 and 5 year treasuries after yields rose dramatically locking in really solid short term yields we have not seen in years. In addition, we took some significant profits on the commodity position we put in place earlier this year. We intend to re-position that cash into solid stocks when we think things have stabilized. We have also continued to rotate some individual stocks we feel will struggle in a slowing economy and inflationary environment. We have added strong value-oriented companies that pay dividends such as Warren Buffet’s Berkshire Hathaway and JP Morgan. We still hold onto high conviction technology names like Apple and Microsoft.
To be clear, we don’t think the economy is heading into a recession now and there will be opportunity to become more fully invested in the future. Until then, we will hold some cash, own companies that we have high conviction in and watch things closely. We will also continue to pray for the people of Ukraine and a resolution to the horrible, unprovoked invasion of their country. Enjoy Spring (if it ever shows it face) and please call us with any questions or concerns.
James W. Ronn, CFP®
Greater Midwest Financial Group, LLC
3222 Rice Street
St. Paul, MN 55126-3047
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Greater Midwest Financial Group, LLC or Five Star Professional. Investor Disclosures: https://bit.ly/KF-Disclosures.
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