If you had to guess how financial markets performed in the first quarter based solely on news headlines, what would you find?
Performance was likely quite poor, right?
Well, the truth is that markets held up quite well in the first quarter, but I wouldn't blame you if you guessed that it was just another disappointing repeat of what we saw last year.
To be sure, after news of markets swooning back and forth on optimism and pessimism on central bank policy, stubbornly high inflation, the prospects of another banking crisis, and the ongoing talks about a recession, there certainly is a lot for the markets to be worries about these days.
Even so, market sentiment has remained buoyant this year even as a host of worries continue to capture news headlines.
So, given how resilient markets have been in the first quarter, the big question now is, "where do we go from here?" Indeed, could the positive start to the year be a sign of a sustained risk asset rally through the end of 2023?
Well, the short answer is, maybe.
You see, while markets have taken many of this year's bad events in stride, history tells us that we're likely not out of the woods yet as far as how outstanding negative events could dent market sentiment. Even so, it's possible that investors could look past historic precedent on their way to a renewed rally after last year's bear market sell off.
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