2022 has been the most challenging year for investors since 2008. The biggest uncertainty is whether or not the Fed is successful in reducing inflation without tilting the economy into a recession.
So far, the economy and inflation have proven to be more resilient to the effects of higher rates, while financial assets have proven to be much more sensitive. Thus, we are seeing weakness in stocks and commodities in anticipation of a recession even though a recession hasn’t materialized yet. This also means that we are seeing big oversold bounces and rallies in beaten down, cyclical stocks.
