Commentary

Through most of this year, until about two weeks ago, economic dynamics were mainly unfolding as expected. Inflation was cooling, albeit slower than many would like to see. Labor conditions remained strong, despite some high-profile layoff announcements in Tech and Financials. Growth remained solid, though with evidence of pressure mounting (mostly as expected). Consumer and business balance sheets were well-stacked to weather a mild downturn (that remains the case, in our view). And notably, the consensus view on major central banker policies was that rates were headed higher in the front half of the year — though that view has shifted considerably over recent days. Today, the events unfolding across the financial space have elevated economic uncertainty and increased risk, in our opinion. And while it is too early to say if the shocks across the banking sector will ultimately have a more pronounced effect on markets and the economy, a defensively biased and high-quality investment approach is certainly coming in handy right about now.