Over the past two weeks, markets have been down between 4 percent and 5 percent, and worries about the economy and inflation have been growing. As a result, I’ve been getting questions as to whether it is time to start worrying about the resumption of last year’s bear market. While the recent volatility may well continue, and there are indeed things to keep an eye on, I don’t think so. Here’s why.

When you look at the news, there is a lot going on. Between politics and geopolitics, the macro environment is more unstable than usual. We see the same on the economic front, for both macro and micro reasons. Economic growth is down and up. Job growth is up—or is it? Consumer and business confidence are down—or are they? And, of course, inflation and long-term interest rates have been trending down—until recently, when they started trending up again.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” — Mark Twain (probably?)

The above quote is a wonderful self-referential example of itself. When I was thinking of it and looked it up, I was quite certain that it was from Mark Twain. But on review, that isn’t certain. So, let’s add this one to the list of things we need to be careful of.

For all the hype around today’s inflation data and what it might mean for markets and the economy, the truth is simply this: not much news here.

After a tough December, the markets rallied in January. Fears about inflation faded, and hopes that the Fed would hike rates more slowly—or even start cutting them—dominated markets as signs of economic weakness appeared. But this bad economic news was good news, as long-term rates pulled back, supporting financial markets.

Let’s get the headline out of the way. The number of new jobs expected in January’s jobs report was around 188,000, down from the prior month’s 223,000. But the actual number came in at—wait for it—more than half a million (517,000 to be exact), which is more than double last month. This is an astonishing beat. And what is even more surprising is that the headline beat is only part of the story.

As we wait for the jobs report on Friday, there is a lot of worry. Signs of a slowing economy are pointing toward a recession this year. Consumer spending dropped two straight months at the end of last year, and business confidence is down to recessionary territory. The Fed is still looking to substantially weaken the labor market, in search of lower inflation. All of the signs are that the jobs market will weaken significantly.

“As goes January, so goes the year” is a well-known Wall Street maxim that, like most Wall Street maxims, is sometimes true and sometimes, well, not true. As of today, we are very much hoping it does turn out to be true this year. January has been a very good month so far, with a significant bounce back from the terrible results of 2022. It would be nice to see that bounce continue. The good news is that—while still expecting volatility—we can expect the market to continue doing well this year. Let’s walk through the reasons, starting with history.

Following up on my colleague Sarah Hargreaves’s post on ESG investing, I thought I would comment on some discussions and questions I have had on the topic. For what is at bottom a simple attempt to make better investment decisions, it has become a surprisingly controversial topic. So, let’s dig in a bit into what is actually happening when we talk about ESG investing. 

After two years of explosive growth, investments incorporating environmental, social, and governance (ESG) criteria endured a challenging market environment throughout 2022. The combination of elevated inflationary pressures, geopolitical tensions, and an energy crisis following Russia’s invasion of Ukraine precipitated a challenging backdrop for sustainable investments. Furthermore, skepticism in the U.S. around the efficacy of ESG—due to greenwashing and heightened politicization—slowed the pace of progress compared to that experienced in 2020 and 2021. But as investors turn the page on a volatile 2022, what does the path forward for ESG investments look like?