Thus far, 2022 has proven to be the antithesis of 2021. Whereas last year was characterized by easy money, peak economic growth, and peak corporate profits, 2022 has seen a tightening of financial conditions, lower economic growth, and slower corporate profits.
Our view is that markets are experiencing a vicious negative feedback loop. Higher inflation stemming from supply chain shocks lingering from post-Covid, excessive stimulus, plus tight labor markets have forced the Fed to be draconian in their rate hikes.
With all this said, investing is about assigning probabilities and we think now is an attractive opportunity to buy stocks and credit. You can never be sure that the worst is behind us, hence, why one must assign probabilities.
We wrote in our last commentary that broadly owning a portfolio of diversified sets of asset classes, as well as owning multiple factors, inflation hedges, and alternatives will be paramount in 2022. We continue to advocate these disciplines. After all, they are Astoria’s True North.
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Astoria Portfolio Advisors