The Monthly Mosaic | December 2021


TRANSCRIPT

The economic environment. 2021 was very positive from the start, you know, we were seeing very large monetary and fiscal stimulus coming into play. So from perspective of markets is certainly had been doing well. But that amount of stimulus put into place in early 2021 certainly helped propel earnings growth higher, and really provided an economic environment that was very favorable to high risk or higher beta investments.

The most cyclical areas and the highest paid area, the markets did really, really well coming off of the election 2020, the vaccine announcements. But things started to change just a little bit, as we entered into March of that year, that's where interest rates peaked. And then we saw a lot of those cyclical names really kind of trade sideways. And then by the end of the year, we saw kind of standard thing that we've seen for the last several years, the largest cap, growth stocks were the winners, large caps themselves were the winners. So again, we had a year with growth, growth outperformed value us outperform the international markets. And it was a year in which he really couldn't take too little risk overall, and still do quite well.

The bond market largely priced in a lot of what we saw, you know, at the end of the year, so we came into the year with rising interest rates 10 year Treasury rising quite quickly, got up to about 1.75%. So the bond market was really forecasting a lot of the inflation that we ended up seeing here at the end of the year. But then really, those interest rates started to go back down, looking forward, looking at what the Federal Reserve kind of response was going to have to be increasing interest rates, likely cooling girl for longer term. And that's why you saw longer term yields fall throughout the remainder of 2021.

2021 was a year in which you couldn't really couldn't take enough risk in the portfolios. I think as we're moving into 2022 It's gonna be much more discerning environment for investors. You know, we're seeing that just in how riskier stocks have performed back half of this year so we're certainly think that it's an environment that you're going to want to be looking at higher quality investments and really not necessarily taking just any risk you're going on we want to make taking more calculated risks in the portfolios.

the monetary outlook is tighter. Right. So we're going to have tapering now the Fed believes is going to be done in March, they look like they want to raise interest rates three times and the dynamic is, are they going to be able to? The overall economic growth likely to slow the yield curve is as falling on the back end? So certainly, there's an anticipation that, you know, they have a tough, tough go in front of them to be able to raise interest rates three times, they should be able to do that as long as the economy continues to hit on all cylinders.


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