In February, markets gave back some of their January gains as consensus expectations for interest rates
moved higher. In other words, the US Federal Reserve may have more work to do than previously thought
in order to tame inflation. This is generally bad news for borrowers (higher interest cost) and good news
for savers (more interest received). We do not expect a nasty recession and the data continues to support
that. This month, we highlight services and manufacturing purchasing managers index (PMI) reports,
which showed services in continued expansionary territory and manufacturing attempting to bottom. So
far, the great Paul Samuelson quip lives on: “The stock market has predicted nine of the last five
recessions.”