To hike, or not to hike, that is the Fed’s question.
Unfortunately, many investors are believing it will be the former. February saw volatility and uncertainty return to markets following a stellar start to the year as expectations for additional Fed rate hikes increased throughout the month. Guiding these expectations higher were disappointing inflation reports and a hotter than expected jobs report (generally a good sign, but not for inflation).
With the disappointing data, US stocks dipped for the month, putting a pause on January’s rally. The Dow Jones Industrial Average led the way lower with a loss of 4.20%, while the S&P 500 and Nasdaq saw losses of 2.61% and 1.11%.
International stocks broadly lagged their US counterparts, with developed international falling 3.47% and emerging markets dropping 6.65%. While there was no singular catalyst for the monthly underperformance, a stronger dollar with higher US yields may have lured some money away from companies overseas.
With markets pricing in the potential for more Fed rate hikes ahead, interest rates reversed course back higher as the 10-year Treasury yield jumped from 3.52% to 3.92%. Rising rates put a damper on bonds, causing the US aggregate bond market to lose 2.59%. Despite the downward pressure on fixed-income as a whole, higher-yielding bonds held up better than traditional bonds as credit spreads remained relatively steady.
A couple months into the year, we can see markets remain somewhat volatile uncertain. This is perfectly normal coming out of a negative year like 2022 as there are still many questions lingering around inflation, interest rates, and the health of the economy. When markets are choppy, it’s exceedingly important to avoid making decisions based on emotion and news headlines. Having a plan and investment approach you can stick with can help guide you when markets aren’t providing a clear direction month-to-month.
You get a verified subscription, you get a verified subscription, everybody gets a verified subscription!
Social media giants are pulling their best Oprah impression, rolling out new verified subscription services. Meta (Facebook) recently announced users of its platform can pay $12 per month to gain a blue checkmark and achieve “verified” status. A couple months prior, Twitter launched a similar option for users who pay $8 per month.
So why is everybody jumping on the subscription bandwagon? These moves are a way to diversify income streams. In 2022, over 90% of revenue for Meta and Twitter came from advertising (that’s a lot of eggs in one basket). With economic uncertainties persisting, the companies worry there could be a slowdown in advertisement spending on their platforms.
After burning through cash and focusing on user growth, it seems social media is looking to evolve into a more stable and efficient business model.
Lime’s doing the boot scootin’ boogie after its most recent financial report.
The micro-mobility company (think electric scooters) announced it was the first to achieve full-year profitability. This was a big step for an industry known for its fast-paced growth and unprofitability.
Back in 2018, Lime’s rival Bird became the fastest US company to reach unicorn status (a value over $1 billion). However, COVID created a headwind to further growth as commuting sagged, causing valuations to plummet.
So what was the secret behind Lime’s success? In addition to recovering demand, the company builds its own scooters rather than buying them from manufacturers. This approach has reduced capital expenditures and helped the company win competitive permits against other companies.
By taking more of the business in house, Lime showed sustainable growth can pay long-term.
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | -2.50% | -2.31% | 3.63% | -7.76% |
| NASDAQ (QQQ) | -0.36% | 0.31% | 10.24% | -14.73% |
| Large Cap Growth (VUG) | -1.42% | -0.29% | 8.81% | -15.85% |
| Large Cap Value (VTV) | -3.24% | -3.83% | -0.54% | -0.41% |
| Small Cap Growth (VBK) | -2.32% | 2.20% | 9.08% | -10.18% |
| Small Cap Value (VBR) | -2.26% | 0.56% | 6.61% | -0.54% |
| Developed International (VEA) | -3.47% | 2.94% | 5.24% | -4.81% |
| Emerging Markets (VWO) | -6.65% | -1.13% | 1.13% | -14.21% |
| REITs (VNQ) | -5.86% | -1.30% | 3.93% | -13.29% |
| Aggregate Bonds (BND) | -2.67% | -0.25% | 0.56% | -9.76% |
| Corporate Bonds (VCIT) | -3.22% | 0.07% | 0.87% | -9.71% |
| High Yield Bonds (JNK) | -1.89% | 0.15% | 2.07% | -7.06% |
| Long Term Treasuries (VGLT) | -4.74% | -0.26% | 2.07% | -23.84% |
| International Bonds (BNDX) | -1.50% | -1.95% | 0.83% | -9.67% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- While March is the best month for basketball (March Madness), it’s the worst for worker productivity. The tournament is estimated to cost employers $4 billion.
- This year’s Super Bowl was the second-most-watched ever, behind only 2015 when the Patriots beat the Seahawks.
- Who’s ready to make a fashion statement? March 11 is International Fanny Pack Day!
- Don’t forget to “spring forward” and set your clocks one hour ahead on March 12!
– The Aspire Wealth Team
Weekly Wake-Up