Three Headed Monster

A lot happened during the first quarter, and most of it was bad. Stocks had negative returns, despite a 10% rally the last two weeks of the quarter, as fears rose about slowing economic growth. The bond market also had negative returns as interest rates spiked due to rising inflation. The Russian invasion of Ukraine added a new level of uncertainty to the markets as economic sanctions and fears of spreading hostilities spooked investors. In this letter we will discuss inflation, the war, and Covid, which together create the Three Headed Monster that is affecting the economy and the markets.

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