Dear friends of Arcus Capital Partners,
We hope this letter finds you well and that you are having a great start to the year. The past twelve months were particularly challenging for investors as global stocks and bonds declined double-digits. The lackluster performance was the result of unprecedented amounts of central bank tightening intended to reign in decades-high inflation. Throughout 2022, the Federal Reserve (Fed) and other central banks tightened financial conditions by raising interest rates and ending monetary stimulus programs. In turn, this led to deteriorating economic data and applied downward pressure to asset prices. Equities fell as investors priced in higher interest rates and increased recessionary risks. Interest rates climbed to levels not seen in over a decade and weighed heavily on bond prices. Finally, commodities, led by energy, were positive even as the US dollar strengthened. We maintain a positive view of equities and credit over the next twelve months; however, near-term headwinds could create periods of higher volatility and lower prices in the interim. We believe investors should maintain a long-term view and continue adding to positions on material weakness. On a side note, our commentary is updating to a new reader-friendly format that includes more charts and tables.