The Investor Insight | April 2023

Q1 Commentary : The Fed’s Balancing Act

As we ended the first quarter of 2023, investors find themselves grappling with yet another (Fed induced, in my opinion), problem: Bank failures. As of the writing of this commentary, we have had three domestic and one foreign bank either fail or need to be taken over by a stronger competitor. Our supplemental commentary a few weeks ago got into the weeds more on why each failed or had to be gobbled up. In short, it is our view that the Fed and its overly aggressive actions do have some fingerprints on what has broken parts of the banking system and continues to impact the economy, as well as the markets. Both stock and bond investors have endured a dreadful two and a half years, where there were little places to hide, and over the past year, the Fed has hammered away at what it perceives as sticky global inflation.