Quarterly market insights from Craig Novorr and Paragon Capital Management, LLC
The market is dynamic and always changing. Craig’s musings on the market include his forecasts and how Paragon is making changes based on the economic environment, leveraging his over two decades of experience as an institutional investment manager.
Quarterly market insights
Newsletter - April 2023
The Law of Unintended Consequences
The biggest theme in 2022 was the Federal Reserve raising interest rates. We have now seen nine interest rate hikes. The Federal Reserve is raising interest rates to combat inflation by slowing down the economy. While most people thought the biggest risk of this policy would be the potential for a recession, we found out that there was another consequence to the drastic increase in interest rates.
Paragon would like to begin with a message to all clients, friends and family in Florida affected by Hurricane Ian. Please know we are thinking of you and are here to help however we can. The safety and well-being of all of you is far more important than our thoughts on the markets!
The first half of 2022 has been historic for investors in many ways. In the newsletter this quarter, we will break down the first half of the year and help to understand how that affects different asset classes.
The biggest theme in 2022 was the Federal Reserve raising interest rates. We have now seen nine interest rate hikes. The Federal Reserve is raising interest rates to combat inflation by slowing down the economy. While most people thought the biggest risk of this policy would be the potential for a recession, we found out that there was another consequence to the drastic increase in interest rates.
Paragon would like to begin with a message to all clients, friends and family in Florida affected by Hurricane Ian. Please know we are thinking of you and are here to help however we can. The safety and well-being of all of you is far more important than our thoughts on the markets!
The first half of 2022 has been historic for investors in many ways. In the newsletter this quarter, we will break down the first half of the year and help to understand how that affects different asset classes.
The April newsletter is quickly becoming the most interesting newsletter each year to write. In April 2020 we had just begun a worldwide lockdown due to COVID and there were so many uncertainties. Many around the world were fearful of the economic impact of the pandemic, not to mention the toll on human lives.
We wrote multiple times throughout 2021 about the issues the markets have been facing, ranging from new variants of COVID to supply chain and labor issues. In past newsletters we have detailed these and many more issues and encourage you to go to our website, www.paragoncap.com, and reread our thoughts on all the issues that continue to concern the markets in 2022.
All nine of the major themes outlined in our mid-year review remain major factors for the markets going forward. Some new themes have popped up over the last
quarter we will discuss in this newsletter.
Now we are at the midpoint of the year, and the S&P 500 increased over 8% over the last three months to be up over 15% for the year. Legislation is bogged down
in Washington as both parties fight over terms of bills. President Biden originally proposed an infrastructure bill with a price tag exceeding $2.25 trillion dollars. It was quickly negotiated down to about $1.2 trillion dollars. Even at the lower amount there is not enough support to get it passed and negotiations will continue for many more months. Tax hikes seem to have died down as well as there are not currently enough votes to get anything passed.
In this quarter’s newsletter we want to demonstrate how we take what is happening in the world and adjust how we manage money. The world, the economy, the markets are all constantly changing - shouldn’t your portfolio as well?
In our last newsletter we reviewed the year as of September 30th. The re-openings in May, the tragic weather around the country, hurricanes, tropical storms, wild-fires and now we add massive snowstorms on the east coast. Dozens of retailers and restaurants have filed bankruptcy and shuttered their doors forever. We concluded our last newsletter looking ahead to the 2020 presidential election and hoping for the approval of a COVID-19 vaccine shortly.
As the third quarter progressed, Mother Nature grabbed the headlines. Hurricanes, tropical storms, and wildfires in California caused catastrophic damage to already economically depressed states. By July, cases of Covid-19 began to spike in Arizona, Florida, and Texas. GDP for the 2nd quarter was announced -32.9%, the worst ever. By August we had surpassed 5 million cases inthe US.
2020 has become a year we will never forget. So much has happened during the last three months and so many things have changed quickly. In this quarters newsletter we will look back at what has occurred, put some perspective on it and give our thoughts on the second half of this crazy year.
We titled our last newsletter in January “Year of Changes”. The changes in 2019 to the industry were a drop in the bucket compared with what we have all experienced through the first three months of 2020. To say we are in totally unchartered waters would be a tremendous understatement. Paragon has tried to keep our newsletters concise, fun and informative. While this quarter our newsletter will be longer, we encourage you to read through it as we will try to break down what has happened and where we think we are headed.
After a long, cold, and icy winter it seems as if Spring has finally arrived in Kansas City. The temperature is rising, the sun is shining, and the pollen is in the air. Just as the seasons change, so does a business. So, as you are enjoying the warmer weather let us tell you about some exciting changes at Paragon Capital Management.
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