It’s not just Cardi B. asking the question! Economists, investors, CEOs of some of the country’s top companies and many in the general public are also worried that the economy is on the verge of recession. Plunging consumer and business confidence, contracting real incomes, and a peak in housing activity all point to a significant weakening in growth, even if the labor market remains healthy.

Since the initial resolution of the European Sovereign debt crisis in 2012, many boutique managers have rated Eurozone equities as a particularly attractive risk/reward opportunity. The initial premise was related to profit normalization. Compared to their European counterparts, the Fed and U.S. government reacted faster and more aggressively to the Great Financial Crisis.

We open another quarterly commentary with a discussion of just how bad the quarter was for fixed income markets. At the same time, however, a host of metrics suggest that many fixed income valuations are as attractive as they have been in several years. While we think caution and patience are the operative words in the spread sectors, we note some extreme dollar price drops given the movement in both rates and risk premia over the course of 2022.

Q1 2022 saw the largest one quarter outperformance of international value in twenty years, and yet 93% of international value managers underperformed the international value benchmark.1 While the disruption of commodity markets from the invasion of Ukraine led to outsized returns in commodity sensitive stocks …

There are decades when nothing happens and there are weeks when decades happen. The last three years and particularly the weeks since February 24th have coughed up more so-called ‘tail-risk’ events than the entire pre-pandemic decade!