February 2022 Market Update

Market Commentary
Written By Michael Mulcahy, CFA®, CPWA®

February certainly saw an eventful market as expectations for the Federal Fund target rates continued to creep up with hot domestic inflation numbers and strong US economic growth. However, the Winter Olympics conclusion brought increased equity market volatility as Russia built up a military presence on the Ukraine border and subsequently invaded. In response, a large number of markets and countries have sanctioned Russia, Russian businesses, and Russian trade - driving market volatility higher.

Equities

  • In February, the S&P 500 finished the month down -3.0%, and the Russell 3000Index finished the month down -2.5%. However, US Small Caps were up on themonth finishing up +1.1% as measured by the Russell 2000 Index.

  • Internationally, markets finished February down -2.0% as measured by the MSCIACWI ex USA with Emerging Markets finishing the month down -3.0%.

  • Notably, Russian equity markets finished the month down -52.8% (and their markets remained closed until likely March 5, 2022).

Credit and Fixed Income

  • The Bloomberg Global Aggregate Index finished the month down -1.2% as interest rate hikes loom on the horizon.

  • Corporate Bonds finished the month down -2.0% (Bloomberg US Corp Bond Index).

  • Municipals outperformed global credit and global fixed income down only -0.4% on the month.

US Sector Performance

  • The top-performing sectors in February were Energy (+7.4%) and Basic Materials(+1.0%). Everything else was down on the month.

  • The worst performing sectors were Communication Services (-6.4%), Real Estate(-4.3%), and Consumer Cyclical (-4.0%).

Macro-Economic Notes

  • WTI total return was up 9.5% in February driven by increasing domestic demand, headwinds on new O&G development, and incoming sanctions on Russian oil exports.

  • February showed the release of the S&P/Case-Shiller US National Home Price Index. Average home prices were up ~18.8% in 2021.

  • February showed seasonally adjusted CPI up 7.5% year-over-year. March 10 will bring the next CPI print.

Michael Mulcahy, CFA®, CPWA®

Michael serves as a Vice President of Kings Path where he provides portfolio design and planning services to help families and foundations achieve their financial and legacy goals. Michael has a passion for developing tax-saving investment and asset location strategies, consulting on the development of estate structures, building and communicating business succession plans and coordinating philanthropic projects for business owners and generous givers.

Prior to joining Kings Path, he was a Senior Investment Analyst at Salient Partners where he worked across different strategies including the following: leveraged credit, value-oriented US equities, covered call and long-short tech-sector. Additionally, Michael worked on special projects where he assisted with capital financing projects, strategic acquisitions, and business unit sales.

Michael received his bachelor’s degree in business honors and finance from Texas A&M University, graduating cum laude. He is a CFA® charterholder and a CPWA® professional through study at University of Chicago Booth School of business. He is a member of the Investments & Wealth Institute® and the CFA Society of Houston.

Michael serves on the board of Vision Inspired Foundation which he helped found in 2017. Happy to be back in his hometown, Michael lives in Sugar Land with his wife, Jordan and two daughters.

Send an email to Michael

Kings Path Partners, LLC (KPP) is an SEC-registered investment advisory business based in Sugar Land, Texas. KPP has published this article for informational purposes only. To the best of our knowledge, the material included in this article was gathered from sources KPP believes to be accurate and reliable. That noted, KPP cannot guarantee that this information is accurate and complete and cannot be held liable for any errors or omissions. Readers have the responsibility to independently confirm the information herein. KPP does not accept any liability for any loss or damage whatsoever caused in reliance upon such information. KPP provides this information with the understanding that it is not engaged in rendering legal, accounting, or tax services. In particular, none of this published material should be considered advice tailored to the needs of any specific investor. KPP recommends that all investors seek out the services of competent professionals in any of the aforementioned areas. With respect to the description of any investment strategies, simulations, or investment recommendations, KPP cannot provide any assurances that they will perform as expected and as described in this article. Past performance is not indicative of future results. Every investment program has the potential for loss as well as gain.

Previous

Understanding Interest Rates
Next

Ukraine & The Markets