March 21, 2022
The chart shows that volatility has increased across all capital markets (Chart 2). Geopolitical and monetary policy “noise” after a period of calm during the pandemic is forcing investors to considering various tail risks that may or may not happen. Despite this noise, four investment themes stand out. First, the tough Fed stance will protect the long end of the bond market and anchor long-term inflation expectations. Second, high energy prices are here to stay, even if geopolitical tensions subside. Third, an eventual buying opportunity is shaping up in growth stocks, including technology, likely in the second half of this year. Fourth, residential real estate is attractive if a correction unfolds as the Fed tightens.