“Life is like a roller coaster, live it, be happy, enjoy life” Avril Lavigne

Global stocks finish the month rather as they started it, on a slightly downbeat note. In between though we had something of a recovery. In the early days of March, the Nasdaq and German Dax index hit bear market territory, the S&P 500 and the Stoxx 50 correction levels, for a change the FTSE 100 held up relatively well. Mainly due to its oil and commodity exposure. Bond investors felt pain from the start to the end of the month.

Equity markets recovered as sentiment fell deep into fear territory. Retail investors, at one point, became as bearish as they have been for the past year, according to the AAII retail investor survey. The CNN fear and greed index hit deep fear’ as investors used the bear market as the perfect opportunity to sell.

No one would have predicted by the end of the month as the conflict between Russia and Ukraine drove oil prices well above 100 dollars, the US treasury yield curve would approach inversion as the Fed maintained its hawkish stance, the Vix fear and greed index would fall back below its historic average as global markets recovered.

It is fair to say we are not out of the woods yet and the strength of the recovery in stocks has probably taken many by storm. At one point at the lows, we made the claim that bulls markets are harder to unseat than people imagine.

As much as Ukraine and Russia rightly makes most headlines at present, Covid for many westerners feels largely like something we are coming to live with. One of the catalysts for the start of the recovery in stocks earlier in March was the Chinese government’s commitment to stimulate the slowing Chinese economy. China will need that firepower as it has once again introduced restrictions in regions as they maintain its zero-tolerance policy against Covid. Disruptions in supply chains are once again at risk of impacting growth and prices.

 We have expressed the view that inflationary pressures will start to ease in the coming months, the latest US Personal Consumption Expenditure Price index for a change came in below expectations both month on month and year on year. The four-month jobless claims average remains below forecasts suggesting employment remains strong. Later on, Friday we get a lot of inflation data for the US economy, it will be interesting to see how markets react should that data likewise indicate inflation rates are peaking.