Equity markets sold off this week as concerns over inflation and economic weakness weighed on risk assets. Bonds were marginally lower, and the yield curve has inverted to near multi-decade lows.i US headline PPI rose 7.4% in November YoY, above expectations of 7.2%, and consumers’ one-year inflation expectations fell to 4.6%, the lowest since September 2021.ii

While current data shows a relatively healthy economy, concerns about future growth are increasing. Yield curve inversion, which is a harbinger of slowing growth and recession, hit its widest level since 1981iii. Additionally, positive jobs data has raised concerns that the Fed will tighten to a level that will potentially trigger a recession. We point out that markets have been repeatedly wrong throughout 2022 that the Fed would slow its pace of rate hikes.

Fed Chair Jerome Powell noted the Fed has made substantial progress toward more restrictive policy but is “committed to restoring price stability . . . to move inflation down to 2 per cent over timeiv.” Elevated wage growth, robust aggregate employment and healthy consumer spending raise concerns that the fight against inflation could drag onv. Inflation does not always decrease in a linear fashion, and negative data could quickly change the narrative and cause rapid market repricing.

S&P 500 earnings are expected to decline for Q4/22, which would mark the first decline since Q3/20.vi The number of companies citing the term “recession” on Q3 earnings calls remained elevated.vii Nonetheless, current equity valuation remains in line with history: the price/earnings ratio of the S&P 500 is at the 10-year average of 17.1x and is cheaper than it was one year agoviii.

Risks and opportunities abound as we prepare to enter 2023. Our portfolios have benefitted from strong risk management throughout 2022, and we believe continued discipline, patience and objectivity are critical in this environment.


Thank you for your confidence in our team.

Asset Management Department

Sequoia Financial Group


[i] Source: Bloomberg.

[vi]Source: FactSet Earnings Insight, December 9, 2022.

[vii] Source: Factset. 179 companies cited “recession” in Q3 2022 earnings reports, well above the 22 from Q3 2021.

[viii] Source: FactSet Earnings Insight, December 9, 2022.

The views expressed represent the opinion of Sequoia Financial Group. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While Sequoia believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sequoia’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. Past performance is not an indication of future results. Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

Sequoia Financial

Talk to an Advisor

We would love to chat with you about how Sequoia can help you achieve your financial goals.

  • Akron, OH - Headquarters
  • Tampa, FL
  • St. Clair Shores, MI
  • Troy, MI
  • Beachwood, OH
  • Cleveland, OH
  • Columbus, OH
  • Mayfield Heights, OH
  • Hilton Head, SC

© 2022 Sequoia Financial Advisors, LLC

Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor. Registration as an investment advisor does not imply a certain level of skill or training.

Markets Concerned Economy Is Both Too Strong and About To Weaken | Sequoia Financial Group


The website encountered an unexpected error. Please try again later.