INVESTMENT UPDATE & OUTLOOK QUARTER 4, 2022

In 2022, most asset classes declined, including those that historically provided some risk protection. Economic growth weakened as the impact of reopening dissipated and monetary tightening measures were aggressively implemented, leading to a marked shift towards a risk-off sentiment as the world emerged from the pandemic. The energy shock, Chinese Covid-19 restrictions, global monetary policy changes, and the Russian conflict further shifted this trend. As a result of this, in response to rising inflation, central banks led by the Federal Reserve and the Bank of England quickly raised interest rates with the narrative leaving a hawkish tone. This was a surprise to global markets as it indicated the era of cheap money and low rates was ending. This led to pressure on the balance sheets of many firms as financing costs increased and weaker companies struggled to stay afloat as the cost of capital increased and reduced potential future profitability.

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