May 8, 2023 •Nathan Willis
Key Events: All Clear – for the pandemic
The World Health Organization declared the COVID-19 Pandemic emergency over.
Worries about the banking system persisted as JP Morgan, the largest US bank, took over the assets of failed First Republic Bank, but First Horizon and TD Bank called off their merger due to regulatory concerns over the size of the combined bank.
Janet Yellen shortened a G-7 finance trip amidst debt limit concerns. The Treasury sold 1-month bills for record-high rates.
The Fed raised rates ¼% for – possibly – the last time this cycle.
Market Review: Slight declines
Stock markets gave up a bit of ground this week; emerging market stocks’ flat performance was the exception.
High grade bonds gained slightly, while high-yield lost ground along with stocks.
Outlook: Managing Risk
As the chart below shows, [1] the assets on bank balance sheets have sustained significant losses; this is likely to lead to caution and decreased lending, which is likely to lead to slower growth.
While we believe the banking system is more stable than during the ’08 crisis, risk management remains a key component of our process. This week we added a small position in a Gold ETF as a hedge against further crisis. OneAscent portfolios are diversified, and we remain disciplined in our process and portfolio allocation.
i Sources: FDIC
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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