Summary. The bearishness that captured most of 2022 seems to have been shaken off by the commencement of 2023. Seasonal tailwinds coupled with some favorable data points early on were, in the end, bolstered by the Fed’s willingness to prevent failures in the banking sector. Fears that inflation had bottomed plagued markets at times, with heightened prevalence in February, but the effects were ultimately short lived. The primary beneficiaries of this macro landscape were predominantly tech, large- and mid-cap growth, gold, long-dated treasuries, and cryptocurrency. 

Outlook. Looking ahead, I expect a continuation of the conditions that drove Q1 success well into Q2, albeit with potentially lower returns. Risks that could derail this trend include a resumption of high inflation prints, unexpected contagion from the liquidity crisis that began in the banking sector, or rapidly eroding macroeconomic conditions in such a way that would spell outright deflation. Most observers will, I imagine, be focused on the Fed and the potential for a pause and pivot of current policy. 

Performance. Stellar performance in Q1 was entirely driven by portfolio concentration in high risk plays, maintained throughout the entirety of the period with slight adjustments. There were numerous occasions the portfolio could have been moved into cash, but the fundamental drivers providing tailwinds for risk were too strong to let price action alone determine a neutral stance.