Investment Commentary


Macroeconomic Outlook: War and Inflation Amplify Winds of Change

Diversification and discipline are always a sound strategy for dynamic markets

At the beginning of 2022, we predicted the new year would see dynamic investment markets and a swiftly changing environment. We noted the potential for a Clash of the Titans as the power of a prolonged bull market came head-to-head with rapidly rising inflation and the end of the Federal Reserve’s accommodative monetary policy. So far this year, inflation is winning the Clash in a rout.

Now things are changing at the speed of light and we find ourselves in an environment the likes of which we have not  seen for 15, 20 years or more.

 

Key Takeaways

  • Three major developments drove markets in the first quarter — the pandemic, the war in Ukraine and the Federal Reserve’s increasingly hawkish stance as it tightens monetary policy.
  • Inflation may have peaked and will likely stay about where it is or recede. One way or another, the massive gap between inflation and interest rates has to narrow. Either inflation falls or interest rates rise.
  • The next two or three years will almost certainly differ from the past 13 years. In no way does that mean you cannot achieve what you want to achieve over a long period of time. There will be new asset classes to consider, including equity investments and fixed income opportunities that haven’t been available in over a decade. Diverse portfolios and active management are more important than ever in this environment.

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About Pitcairn

Pitcairn is a true family office and leader in helping families navigate the challenges and opportunities created by the interplay of family and financial dynamics. Through Wealth Momentum®, an experience-based family office model, Pitcairn helps families achieve a more effective and complete experience. Since its inception, Pitcairn has partnered with some of the world’s wealthiest families to meet their needs and drive better outcomes – year to year, decade to decade, generation to generation. Today, Pitcairn is recognized as an innovator, guiding families through generational transitions and redefining the industry standard for family offices. The firm is located in Philadelphia, with offices in New York and Washington, DC and a network of resources around the world.