Q1 2022 – Annandale Capital Quarterly Commentary

Yesterday (April 5th), the S&P 500 and Nasdaq fell -1.2% and -2.3% respectively. Today things are looking even worse. As I write, the two indices are down an additional -1.4% and -2.7%. The cause cited for the selloff, hawkish comments from two of the Federal Reserve’s most dovish members. Fed Governor Lael Brainard said, “it is of para-mount importance to get inflation down” and that the Fed may begin reducing its balance sheet “as soon as our May meeting.” And San Francisco Fed President Mary Daly, assured: “we’re not going to let this (i.e., inflation) go forever.” I am usually skeptical of the media’s ability to explain day-to-day market movements. It presupposes a level of knowledge that no single pundit or market participant has, but today I find the explanations less off-putting. Inflation, and in turn interest rates, are one of the most powerful forces in financial markets. And as sad as the news is coming out of Ukraine, rampant inflation is the 100-pound gorilla in the room. Download Q1 2022 Commentary