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In this episode of the Family Office Services podcast, Tamer Alamuddin and Christine Wright of Choate Investment Advisors discuss the current U.S. debt ceiling, related political gridlock and fears about financial instability.

Choate Hall & Stewart LLP announced today that partners Marc J. Bloostein, Cameron Casey, Kimberly E. Cohen, Jennifer S. Ewing and Geoffrey M. Mason will join Choate’s Wealth Management Group from Ropes & Gray’s Private Client Practice. 

Despite the failure of Silicon Valley Bank in March, the first quarter provided welcome relief to stock and bond investors as the S&P 500 Index gained 7.5%, the MSCI All Country World Index (ACWI) gained 7.3% and the Bloomberg Aggregate Bond Index (AGG) gained 3.0%. The economy is slowing and corporate earnings forecasts continue to decline, raising caution about the near term outlook. Yet, these lower growth expectations are helping lower interest rates, which led to higher bond prices and sparked a rally in a few growth stocks that dominated stock market returns for the first quarter.

In this episode of the Family Office Podcast Series, Managing Director, Tamer Alamuddin, and Senior Portfolio Manager, Henry Dormitzer, of Choate Investment Advisors discuss safe assets in light of the recent volatility in the banking sector.

2022 can be summarized by some of the worst stock and bond returns of the last 50 years. The Federal Reserve and other central banks rapidly raised interest rates to combat high inflation made worse by lingering supply chain issues (and further exacerbated by the Ukraine War), and investors grappled with falling bond prices, stock valuations and the rising risk of an economic recession. The S&P 500 declined 18.2%, the MSCI All Country World Index (ACWI) declined 18.4% and the Bloomberg Aggregate Bond Index (AGG) declined 13% - one of the worst years for bond investors on record. Read more for our review of 2022 and outlook for 2023.

The new “Massachusetts Millionaires Tax” goes into effect on January 1, 2023 and will impose a 4% surtax, in addition to the 5% flat income tax, on those who domicile or reside in Massachusetts and earn over $1 million annually.

Markets continue to struggle with the possibility of a recession and the push against inflation. The global economy is reacting to the rapid increases in interest rate policy from government central banks as they seek to restrain inflation. The Federal Reserve’s Fed funds rate is rising rapidly (beginning the year at 0.0% and now at 2.75%, and expected to end the year above 4.0%).

With rising inflation and slowing growth, the stock and bond markets continue to struggle in Q2 2022. In response to persistent inflation, the Federal Reserve and other central banks are further increasing interest rates. In April, the year-end forecast for the Fed funds rate, which affects many consumer interest rates, was 2.7%; today, the year-end forecast is 3.4%. Rising interest rates continue to put pressure on bond prices.

The Boston Business Journal ranked ChoateIA among the Top 15 in its 2022 list of the Largest Independent Investment Advisers in Massachusetts.