Broker Check

Mosaic Weekly Article

March 21, 2022

Finally, after several weeks of drifting lower, our financial markets bounced and showed some signs of life again. A welcome change for all of us indeed. As expected, the Federal Reserve Committee stayed the course and raised interest rates by one quarter point. While several economists feel this is not enough to keep the proverbial inflation train on the track to slowing down fast enough, the move came as advertised. This is only the beginning of what looks to be a long and slow unwinding of the pandemic fueled aggressive moves we had become accustomed to. The consensus, at least for today, is that we will most likely see at least 5 more increase to the benchmark rates this year. There are now at least two Federal Reserve Governors calling for a half percent increase at the next meeting in May. As the pressure builds to get inflation under control, the momentum could be swinging in favor of taking more action sooner rather than dragging things along. The continued tensions in the Ukraine have undoubtedly warranted a slow and steady pace, but as things evolve abroad, a different course of action might become more prudent here at home.

Several articles we read throughout the course of the week mentioned the dreaded "R" word. Given the backdrop of rising commodity prices, soaring inflation, and a slowing economy, recessionary fears have begun to surface. While I believe it is still too early to fully participate in this thought process, it is worth noting as more economic data is released in the coming weeks. With so much uncertainty both at home and abroad, we must keep a close eye on the lagging economic activity for indications and signs of the way forward.

As the world continues to watch the situation in Ukraine unfold, it appears that some of our other concerns, primarily China's level of engagement, are becoming less alarming for the time being. On Friday, President Biden spoke with Chinese President Xi Jinping in the hopes of reaching a shared understanding of China's position on the present political situation. With China still dealing with Covid lockdowns and attempting to recover from its own recession, a more "neutral" attitude is certainly in their best interests. While attempting to restore their economic footing, China must maintain strong relations with its global trading partners. Fortunately, it appears that the two-hour discussion focused on the necessity for peace in the Ukraine and regional stability.

Another week has passed, and as usual, information overload reigns supreme. We will continue to keep an open and patient approach as part of our overall strategy. Fortunately, March Madness, St. Patrick's Day, and the warmer weather make things much more bearable!

Have a fantastic weekend!