CIO Monthly Observations - March 2023

Chris Zaccarelli |

Markets in Review

Markets gave up some of their gains in February, as the S&P 500 dropped -2.6% during the month, reducing its year-to-date performance to 3.4%. The MSCI All Country World index also fell, giving up -3.0% in February, which leaves its year-to-date return at 3.9%. The Bloomberg BarCap U.S. Aggregate Bond index dropped -2.6% during the month and its year-to-date return is now 0.4%.

What started out as a strong start to the year was interrupted by renewed Federal Reserve hawkishness and a belief by investors that inflation was going to continue to pose a problem for the Central Bank and the economy. Geopolitical tensions also increased, as China piloted a spy balloon over the United States and Russia’s war in Ukraine showed no signs of winding down any time soon.

Monthly Highlights

  • Minutes released from the Fed meeting indicated a willingness to continue raising rates
  • A spy balloon from China illustrated how they are becoming a major adversary
  • Russia continues to crack down on dissent over how the war in Ukraine is described

News in Review

Below are some stories that caught our eye this past month. To learn more, follow the links to the full article.


Fed Resolved to KeeFighting Inflation with Rate Hikes

The Federal Reserve concluded a meeting in the beginning of February and the minutes said that “ongoing” rate hikes would be necessary as inflation “remained well above” their 2% target. A “few” members even said that they would have preferred to raise rates by 0.5%, instead of the 0.25%, which the majority voted for. The Fed is alarmed that the Consumer Price Index (CPI) was up 6.4% over the past year has the and they are going to keep raising interest rates until they feel comfortable that inflation will drop back down to their target.

Balloon Crisis Highlights a Split in China's Leadership

A Chinese spy balloon floated over the United States for close to a week before the Air Force shot it down off the coast of South Carolina. Some officials from the Pentagon believe the decision to fly the balloon over the continental US was made by a high-level Chinese official, potentially without the knowledge of Chinese President Xi. The pentagon official even asserted that he didn’t believe that Xi trusts his own military.

Russian Support for Ukrainian War Hardens as Putin Cracks Down

Russian President Putin has been sending critics of the Russian-Ukrainian war to jail and it’s against the law in Russia to even call it a “war,” where they instead they call it a “special military operation.” As a result of the crackdown, the majority of Russians are now behind the war according to independent polls, as the combination of propaganda and negative consequences for speaking out against the war are starting to have an effect.

First Generation iPhone Sells for $63,356

A woman who bought an iPhone in 2007, but never opened it, was able to sell it at auction for a whopping

$63,356. She said she had recently bought a new phone and was under contract with Verizon and hadn’t wanted to switch to AT&T at the time. The phone fetched such a high price because it was in perfect condition (in original factory packaging) and because people assign a nostalgic value to the first iPhone, because it ushered in a whole new era of technology, that has now become ubiquitous.


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S&P 500 INDEX: The Standard & Poor's 500 Index is an unmanaged, capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
NASDAQ 100 INDEX: The Nasdaq 100 Index is an unmanaged, capitalization-weighted index of the largest 100 non- financial stocks traded on the Nasdaq market. Unlike the S&P 500 it does not represent all major industries and may be more volatile than more broadly constructed indices.
MSCI ACWI INDEX: The MSCI ACWI captures large- and mid-cap representation across 23 developed markets (DM) and 24 emerging markets (EM) countries. With 2,495 constituents, the index covers approximately 85% of the global investable equity opportunity set.
Bloomberg U.S. Aggregate Bond Index: The Bloomberg U.S. Aggregate Bond Index is a broad-based index of the U.S. investment-grade, fixed-rate bond market, including both government-related and corporate securities and mortgage- backed and asset-backed securities.
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