We enter 2022 cautiously optimistic on the world, the economy, markets and our proprietary portfolios. For the third year in a row, 2021 had double digit returns in the equity markets and we are gratified that our portfolios performed in a similar fashion. What all of us at Kimelman & Baird LLC are most proud is our ongoing effort to assist our clients to lead their One Best Financial Life® during these challenging times.
Covid-19 and the Economy
As we begin a new year, Covid-19 and its variants Delta and Omicron are still at the forefront of investors’ and society’s concerns. The hope when last year began was a robust vaccine rollout would put an end to the pandemic and create a dramatic reopening of the global economy. While Covid-19 continues to affect us all the massive fiscal and monetary programs put in place early in the pandemic have led to strong economic growth albeit lumpy.
Gross Domestic Product is high with forecasts of greater than 4% going forward over the next several quarters. Corporate earnings are robust and continue to surge to record highs. Employment levels in the United States are as strong as ever with the unemployment rate sinking towards just 2%. Bond yields remain low, equity markets are also at record highs, and consumer net worth is abundant. However, this robust economy risks the possibility of overheating if the pricing pressures now evident are not reined in.
In response to this, the Federal Reserve in the United States has changed its strategy to soften the blow of inflationary pressures on the economy without abruptly or dramatically slowing down growth. The tools it will use are the reduction of liquidity in the system and raising interest rates. These tools take time to implement and act with a lag of many months. The concern for investors is an overreaction by policy makers that inadvertently creates an economic slowdown and eventually a recession. Historically it has taken many rate hikes over the course of many months or years to create such a situation. In response to the Fed’s announced change in strategy the markets have priced in the possibility of three small rate hikes and the beginning of liquidity program reductions in 2022.
As always, we will closely monitor any changes in policy and economic conditions in the short and medium term while remaining focused on our long-term investment philosophy aligned with your unique goals and values.
Team Updates and News
This past year our longtime friend and colleague Melinda Lloyd as founder of the Lloyd group joined Kimelman & Baird LLC. We welcome Melinda who comes to us after many years at Neuberger Berman Group LLC. Joyce Chan who has been with us for over 16 years and is an integral part of our team just welcomed a wonderful addition to her family, a handsome baby boy. We also celebrated our partner Sapan Vyas’s 20th anniversary with the firm. Our founding partner Michael G. Kimelman announced his retirement as of December 31st. A true visionary, we wish him the absolute best with his future endeavors.
Last spring, we officially launched kimelmanbaird.com. Concurrently Kimelman & Baird LLC, our partners and employees all created a presence on LinkedIn. We encourage you to visit our site and follow us on LinkedIn to view our rich 55-year history, mission, and relevant content
As always, we appreciate your confidence and support.
This communication is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities, funds or strategies to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction.
United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.GS PFM is not affiliated with Kimelman & Baird, LLC. All names, logos, and slogans identifying United Capital and United Capital’s products and services (including, without limitation, HonestConversations®, MoneyMind®, FinLife®, Financial Control Scorecard®, Live RichlySM, We Help You Live RichlySM, Helping People Live Richly®, One Best Financial Life®, Ideal Life Index®, GuideCenter®, InvestmentViewfinderSM, United Capital Financial Life Management®, and Financial Years of FreedomSM) are trademarks and service marks or registered trademarks and service marks of United Capital or its affiliates in the United States and/or other countries.© 2020 United Capital Financial Advisers, LLC, a Goldman Sachs Company d/b/a Goldman Sachs Personal Financial Management. All Rights Reserved.