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For investors, uncertainty is often worse than bad news, and 2023 is turning into a year of continued uncertainty. We got positive economic data, with caveats, in both January and February. In January, mostly positive news caused stocks and bonds to rally. In February, mostly positive news caused stocks and bonds to lose value. So: What’s going on, and what’s the takeaway for investors?

(You can also read the complementary analysis from the team at Sanctuary Wealth.) 

Economic data and policy

Inflation is slowing… very slowly. The latest inflation data released in February showed prices rising 6.4% between January 2022 and January 2023. While 6.4% is still a significant increase, it’s also the smallest increase since October 2021. (In other words, it’s positive news, with a caveat.)

Jobs data is due in on Friday, March 10. Economists are wondering whether the strong jobs report we saw last month can continue, which may influence how the Federal Reserve behaves in the coming months.

Speaking of which, Fed President Jerome Powell is set to speak this week. Expect investors and traders to read the tea leaves on anything he says—the market may move in response. Whatever happens, remember it’s likely short-term. Instead of focusing on volatility, we suggest clients focus on long-term market trends and personal, big-picture goals.


The S&P 500® peaked around early February before falling and closing the month down slightly. One reason? Corporate earnings. Legendary investor Warren Buffett took on the skewed system of Wall Street earnings in his annual shareholder letter in February.

The gist? Investors expect companies to report earnings that are better than analyst predictions. They often look to accounting to help them do this, according to Buffett, which makes it harder to evaluate stocks based on long-term value.

There’s more to the quarterly earnings conversation than Buffett’s opinion might indicate.

Each quarter, the vast majority of companies report earnings that beat analysts estimates. In February, companies reported fourth quarter (and some full-year) earnings reports that missed analyst expectations. A large majority of companies (about 69%) still beat expectations, but it was a smaller majority than usual (76%).

That may have been enough to spook some investors and cause Buffett to weigh in.


Bonds also fell, from a total return perspective, in February. After a 0.25% rate hike in January, yields on bonds stabilized last month and even started falling. However, we’re not out of the woods on Federal Reserve rate hikes, so expect more fluctuation in yield, price, and overall bond returns for the rest of the year.

Higher interest rates mean companies are rethinking their balance sheets, which may create an opportunity for bond investors. February saw a record amount of corporate debt issued. Highly-rated corporate bonds may be an opportunity for investors to capture yield without drastically altering their risk profile.

Other investments

Cash is king—and we got a big reminder of that in February. A year ago, the returns offered by banks, CDs and the U.S. Treasury were near zero.  But as the cost of borrowing increases in the face of persistent inflation, we see investors paying more attention to liquidity and cash-equivalent assets.

The yield on the 6-month U.S. Treasury recently topped 5% — that’s a return on cash that starts to raise eyebrows. There are a wide variety of cash equivalent investments with different terms, protections, and uses for investors to consider.  March may be a great time to rethink the role of cash in your portfolio.

There are plenty of reasons for optimism as we head into spring, and plenty of reasons for caution. Being mindful of the uncertainty without focusing on it too much can help you stay on course to meet your family’s needs and goals.