March Madness

April 13, 2023

Over the past few months, equity markets have remained volatile, and a few major economic events have kept them that way. Events including the fall of Silicon Valley Bank, rate hikes by the Federal Reserve, inertial inflation, and steep job cuts. These events, while mostly negative, did bring some positive reactions to equities, at least in the beginning of the year. The uncertainty that came with each of these events, however, has made for a very volatile ride, especially in March. In the past month, we saw the most volatility in equities this year.

Despite this, equity markets ended the month on solid footing. US equities as tracked by the NASDAQ Composite and the S&P 500 index closed up 7.40% and 4.00%respectively.  Developing markets also performed well returning 0.92% as tracked by the MSCI Emerging Markets Index. Bonds saw a steady rise with only one dip below their origin that happened in the first three days of the month. Based on the Bloomberg US Aggregate Bond index, bonds returned 3.14% this month. Then to wrap up this positive month, the gold index closed up 7.52% as tracked by the London Bullion Market Association (LBMA)Gold Price. So again, despite the volatility, this month's market performance outperformed that of the last two.

One of the first consequences that we’ve seen from the Fed aggressively hiking rates over the past year was the downfall of Silicon Valley Bank (“SVB”). Exchange Traded Funds (ETFs) lost the momentum that they had in February as a sharp decline occurred as news of SVB spread. The California Department of Financial Protection and Innovation shut down SVB on March 10 and the troubled financial institution filed for bankruptcy on March 17. SVB was a bank primarily designed to support tech start-ups in and around Silicon Valley and was also the 16th largest bank in the nation. Its downfall came as a shock to many Americans.

With fears of a recession already lurking this news ushered in a new, albeit relatively contained, layer of panic over the markets. The FED stepped in to bail out SVB in their last days by providing them with funds to repay debts. We observed this same type of governmental backstopping of moral hazard during the financial crisis of 2008. This discrepancy in what the Federal Reserve says it will do and what it actually may do leaves uncertainty and fear for the American people to face. Fortunately, though, some of the panic was diminished when First Citizens Bank acquired nearly all of SVB and its debt on March 26.

Immediately following the collapse of SVB, US-based Signature Bank collapsed. Then following closely behind the two of those came the collapse of Credit Suisse, on March 15. Credit Suisse has faced scandals in recent years that, while not being the sole reasons, were certainly contributing factors to its downfall. Banking trouble filled the first two weeks of March and rocked the global financial system, but following the banking turmoil, in the third week of the month the FED added $300B of assets onto its balance sheet.  In the week following that addition, we saw one of the effects of those assets when they raised interest rates from 4.75% to 5%.

Another change in the last month that had some effects on equities was the adjustment in food stamp benefits.  Extra benefits that went into effect during the Covid-19 pandemic were sunset by the Department of Agriculture. This change, coupled with the pressures of inflation, has affected the US economy on a larger scale because food stamps are directly correlated to the US Gross Domestic Product (GDP). So, the decrease in benefits will force GDP down and equity markets may struggle consequently.

We saw fluctuating returns and price action movement the last few months but, for the most part, the market has been able to quickly recover from each strange event to date. While there is still a lot of uncertainty lurking in our markets, we can walk away from Q1 2023 with some relief in knowing that March was a month with positive returns. As we head into Q2 2023, equity markets have been predominantly flat in the face of lingering uncertainty revolving around the nation's banks.


Hazel Allen
Portfolio Management Analyst


Inertial inflation is a situation in which all prices in an economy are continuously adjusted with relation to a price index by force of contracts.

The California Department of Financial Protection and Innovation regulates a variety of financial services, businesses, products, and professionals. The department operates under the California Business, Consumer Services and Housing Agency.

 The LBMA Gold Price and LBMA Silver Price are the global benchmark prices for unallocated gold and silver delivered in London.

The Bloomberg U.S. Aggregate Bond Index is a market capitalization-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented

 The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance stocks of technology companies and growth companies.

 The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.

 The MSCI Emerging Markets Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is afloat-adjusted market capitalization index.

 Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period.

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