Global equities declined in Q1, with the MSCI ACWI index falling 5.4% for the quarter. Over the past one-year, the index was up 7.3%. The S&P 500 fell 4.6% during the quarter but held up better than most other regions. International developed stocks declined 5.9% in Q1, reducing the one-year gain to 1.2%. A stronger dollar detracted 220 bps from US$ returns during the quarter. Emerging market equities fell 7.0% in Q1. Large-caps outperformed small-caps during Q1 and over the past year. Value outperformed growth during the quarter. The energy sector spiked during Q1 on higher oil prices, and it was the best performing sector over the past one-year. Communication services was the worst performing sector over the past quarter and one-year. We expect the global economy to continue to expand over the short-term. However, the risk of a recession could rise late this year and into 2023 as financial conditions tighten.

Valuation multiples generally improved during the quarter as price declined and earnings improved. The trailing P/E ratio on the MSCI US Index fell from 26.1 to 23.11. International developed stocks remain more reasonably valued than US stocks, although the Russia Ukraine conflict and its impact on energy and other commodity prices presents risks, particularly for Europe. Political risks associated with among other things, the Russia Ukraine conflict became increasingly prevalent throughout the quarter and could lead to additional volatility and downside risk. Emerging market valuations remain more attractive than developed markets. Recent lockdowns in China are a risk to emerging markets, although policymakers have indicated a more accommodative stance recently.

The Bloomberg Aggregate declined 5.9% during the quarter. Treasuries declined 5.6%, but outperformed corporate bonds, which declined 7.7%. The Fed raised rates by 25 basis points in its March meeting, its first post-pandemic rate increase. Guidance from Fed officials has become increasingly hawkish, suggesting the potential for 50 basis point rate hikes at FOMC meetings later this year. The Fed seems committed to bringing inflation down. The market has already priced in significant tightening, which should allow the Fed some room to maneuver, if needed. However, an aggressive pace of tightening could weigh on equity valuations and increase the odds of a recession over the intermediate term. Overseas, the European Central Bank left rates unchanged, but accelerated the wind down of its bond buying program. The Bank of England raised its policy rate twice during the quarter to 0.75%.

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¹ The information found in this document was derived from Mercer, The Wall Street Journal and InvestorForce. While we believe these data sources and information to be reliable, its accuracy and completeness are not guaranteed. The views contained in this presentation represent the opinions of GYL Financial Synergies, LLC as of the date hereof unless otherwise indicated. This and/or the accompanying information was prepared by or obtained from sources GYL Financial Synergies, LLC believes to be reliable but does not guarantee its accuracy. The report herein is not a complete analysis of every material fact in respect to any security, mutual fund, company, industry, or market sector. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance does not guarantee future results.