XMHQ - Quarterly Investor Letter Spring 2022

• The broader equity categories turned in negative results in Q1. U.S. large-cap stocks, as measured by the S&P 500 Index, held up the best at a decline of 4.6%. Bonds performed worse than many of the equity categories, despite typically being viewed as a safe haven investment.
• In the first quarter of this year, crude oil is up more than 27%, and as the month of March got underway, crude oil prices more than doubled from the same time a year earlier. Higher energy prices can be a headwind for economic growth.
• The Federal Reserve embarked on a tighter monetary policy. The Fed increased the Fed Funds rate by 0.25%, or 25 bps, in March. The Fed’s desire to lift interest rates is driven by the higher level of inflation, which now seems to be systemic in the economy rather than transitory.
• With the Fed intent on reining in inflation via higher interest rates and a reduction in the Fed’s balance sheet, a midterm election year and the unfortunate humanitarian crisis resulting from the Ukraine/Russia conflict, additional market volatility is likely over the next several quarters.

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