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:
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.
OAI00110