The Armstrong Report: Spring 2022 Firm Update

Reginald A.T. Armstrong • The Armstrong Report

What a quarter! Not one for the faint of heart. While weakness in both bonds and stocks were obvious in your statements, it was the Russia invasion of Ukraine that stole the headlines and led to even greater volatility. So how do things stack up?

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After a robust 2021 (still making up for a negative 2020), Gross Domestic Product growth likely slowed in the first quarter. The estimate from the Federal Reserve Bank of Atlanta as of March 29th when I was writing this has the growth at only 0.9%. Despite this weakness, due to the inflationary pressures we all feel, the Federal Reserve raised the Fed Funds rate by 0.25% in March and indicated they would continue to hike, perhaps even more aggressively, to rein in the inflationary pressures. Besides the fact they should have done so long ago, I have a major concern with this. You see, the raising of rates not only removes some of the liquidity in the system (which does help), but it also lowers economic activity. This might help if economic growth was robust. But if it is already slowing, this raises the specter of stagflation or even recession. The yield curve has already inverted at several points and flattened out at others; this signals a policy error by the Fed. In plain language—they are late, and their action may now kill the expansion. Of course, economic growth could resume for the rest of the year and their actions work exactly as intended: inflation cools off, but growth continues. Don’t hold your breath.


There are several notable market actions. First, bonds—traditionally the “safer” and more stable part of a portfolio—are off to their worst year in recent history. 

While losses are modest compared to when stocks drop, they are significant compared to what bond investors have come to expect. As of this writing, it is my opinion that this move is extended, and some relief is likely to come soon. In addition, if we get a major market down move, I expect yields to drop and bonds to claim their status once again as a safer haven in times of turmoil. Another major action has been the stealth bear market, especially in Nasdaq stocks. While the Nasdaq at its low this quarter fell over 20%, many of its constituents fell 40%, 50%, or more. Finally, the inflation scare combined with the war led to major upside moves in commodities. About a month ago, we would normally have added commodities and other similar investments to some of our portfolios. However, the spike in late February through mid-March caused by the war seems overdone in the short term. We continue to monitor.

So, don’t give up on diversification and don’t let short-term thinking throw off a long-term plan. Give us a call if you have questions.

Our Firm

We bid farewell to Alison this quarter as she embarked on a new journey. Unfortunately, the best decision was to shut down the Camden office. We, of course, will continue to serve all our clients, regardless of location. We serve clients in many different states.

This May marks 25 years since I began serving clients. This April marks 20 years of our affiliation with LPL Financial, and January was 10 years in our current location (we recently upgraded—thanks to Taylor Gardens and Landscaping—our front landscaping to celebrate).  

Please drop in on May 19th for our 25 Year Anniversary Celebration Open House. We will have breakfast from 8:30 am to 10:30 am, lunch from 11:30 am to 2 pm, snacks until 5 pm, and a Greater Florence Chamber of Commerce Business After Hours from 5:30 pm to 7 pm. All food provided by Venus Catering. See you here! 

Thanks for your continued trust.

Download to View the Full Newsletter

The Armstrong Report is our quarterly newsletter featuring an update from the firm's President and other useful information.

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