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Update on Current Market Environment

You’ve undoubtedly seen the news on Ukraine and Russia, and have probably noticed this has caused extra volatility in the financial markets, with some big swings to the downside, but thankfully some big swings to the upside so far as well. The news and markets are still fluid, seemingly changing by the minute, but your relationship team at TrustBank wanted to reach out with our thoughts on all this so far, and you can expect more to come as events unfold.

  1. Putin is a causing more harm to Russia than good.
  2. Weakened case for Europe in the short term, our strategy has been overweight the US for several years and continues to be.
  3. The next stage is what matters and that is what the market is looking at, which has been reflected in 10 year treasury rates and oil prices this week.
  4. Reinforced case for 25 basis point rate hike in March instead of 50 basis points, which should be less of a shock for equity and bond markets to digest, offer a more stable trend and what to expect from the Fed, which should reduce volatility over time.
  5. Inflation gets lower a few years out…higher prices is the cure for higher prices.
  6. Technology valuations are still too high and rates are going to go up, our strategy has been overweight “growth stocks” in general which have outperformed for several years, and we are now looking for opportunities to trim this exposure and rebalance towards more “value stocks”, which should better-protect portfolios from rising rates and increased volatility expected this year.
  7. Our economy at home is very strong and continues to be, and American consumers will keep spending. The Fed and historically-low interest rates are still very accommodating for growth, we do not see recession on the horizon, and stocks are still the best place to invest in this environment, as well as good protection from inflation over time.

We have strategically positioned your investment portfolio for your long-term goals, and have made tactical changes to take advantage of opportunities as they present themselves. Your TrustBank team is always available to further clarify your investment objectives and long-term financial plan.

AZ Senior Portfolio Managers