Intro by: Devon Porpora, Senior Managing Director, Wealth Manager
First Republic Investment Management
The markets have strung together three solid consecutive up days. This may signal we have seen a bottom but we remain at the mercy of current events. Today’s decline, due to the price of oil moving higher again, is an example of how more bad news can send us lower despite some upward momentum.
The market is a discounting mechanism, so today’s prices reflect an aggressive Federal Reserve hiking of interest rates, a protracted Ukrainian conflict with hefty Russian sanctions and high energy prices. That is a lot of bad news and probably means any improvement to those issues will send the market higher.
One risk that is likely not built in here is a domestic economic slowdown. While Europe is likely going to see a recession due to Russian sanctions, we are expected to be mostly unscathed. But high prices combined with European weakness may be enough to dent our current robust reopening economic expansion. We will be watching closely. Please see attached or below for more from our research team.