December 2022 Monthly Review

Jordi Visser

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2022 was a brutal year for equities and bonds. The SPX had its worst year since the Global Financial Crisis, and the Barclays Agg had its worst year since the 1970s. December did not bring holiday cheer as the SPX closed the year down almost 6%, significantly led again by the technology names. Despite the bad year for equities, the SPX was up in the final quarter, marking the first positive quarter of 2022. Following FOMC and CPI data, December had low volume. Meanwhile, the dominant factor theme was value outperforming growth. As we ended 2022, both equity and fixed income have moved to vol levels where we expect risk-taking if the market avoids a recession.

There were very few signs of risk-taking in the equity investment space all year. Prime brokerage books highlighted long-short equity de-leveraging as the abrupt drop in technology and growth stocks forced many large hedge funds to reduce positions in the first half of the year. With uncertainty around the Fed and inflation, our PMs did not see signs of funds looking to take risk. However, with low sentiment levels and expectations that the Fed is close to being finished tightening, we expect to see the best opportunities for the equity PMs since early 2021, before the de-leveraging started. Further, we expect the environment to favor fundamentally driven trading strategies as macro forces calm down in 2023.

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Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.

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