Dear friends of Arcus Capital Partners,
We hope this letter finds you well and that you are having a great start to the year. After two years of stellar performance, equities finally stumbled during the first quarter. Investors were laser-focused on the Federal Reserve (Fed) as the group vocalized its plan to normalize policy quicker than most experts anticipated. Additionally, the conflict in Ukraine weighed on investor risk appetite and helped send commodities to multi-year highs. It was a lackluster quarter for global equities as volatility spiked and most indexes finished in the red. Interest rates continued their march higher across the yield curve, and the Fed raised short-term rates for the first time since 2018. Finally, commodities regained their footing, and many sub-sectors made fresh highs, even as the US dollar strengthened. Our outlook remains positive for equities and commodities and negative for rate-sensitive fixed income. We continue to anticipate above-average levels of equity market volatility but believe that investors should selectively add on material weakness.