ECONOMIC IMPACT. The economic data via govt stats continues to conflict with private sector data in terms of health of US economy. We tend to believe what we see and can confirm via corporate earnings to gauge the health of US economy which for all intensive purposes is deteriorating especially consumer spending. This may continue as we stated many times as we head into recession in 1H23 as Fed continues to raise rates ignoring the FACT that unit demand is falling across the virtually the entire economy only to be masked by rising prices offering the illusion of growth.
INVESTMENT IMPACT. We continue to maintain yield vs growth orientation in models as we believe valuations remain elevated as we head into what maybe an ugly period of earnings revisions. Markets remain wholly dependent on Fed policy which appears to be continuing on rate hikes which may eventually cause yet another crisis or at least a recession especially a an earnings recession. With this not appearing to change we seek yield to get paid to wait for better economic times in years to come.
We remind investors that going forward expectations for returns for the overall market over the next decade remain low as we expect well below returns vs history. Be that it may we are hopeful our models can improve on that going forward.
Our model portfolio performance has been updated as of the date of this newsletter.
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