Q2 2024

With generative AI driving stock prices, index returns, and capital expenditures, it makes sense to take a step back and try to come to a view about what’s really happening. What are the opportunities for monetization, and do they justify the vast sums being invested? As long-term investors, we need to balance near-term business and price momentum with long-term prospects.

Q1 2024

Despite the delayed rate cuts, the good news is that performance broadened as economic resilience boosted sentiment across a variety of sectors. Of course, over the long run, interest rate stability engendered by a steadily growing economy beats rate cut catnip.

Q4 2023

Following a summer lull, the market received a booster shot from rapidly falling inflation despite the economy and employment remaining strong. Futures markets started anticipating 2024 rate cuts, and the heretofore mythical “soft landing” became conventional wisdom.

Q3 2023

In the third quarter of 2023, investor attention was primarily focused on the interest rate environment (ignoring political issues, such as Congressional battling over budgets, funding, and the Speaker of the House). While Federal Reserve rate increases moderated, the target rate was raised 25 basis points (bps) at the July meeting, and the current outlook envisages one additional hike.

Q2 2023

In our 2022 year-end commentary we noted the remarkably consistent track record of stock market gains in every year that followed a midterm election dating back to World War II. We also noted the rare instances of the US stock market declining over two consecutive years.

Q1 2023

The New Year kicked off with an ebullient rush back into assets as equities, corporate debt, and Treasurys all caught a bid.  In many ways, it looked like the S&P 500 rally that began in mid-October was set to continue after a brief pause for tax-loss selling in December.  Buoying the narrative were a series of positive data points that suggested that the Federal Reserve was winning its war on inflation.

Q4 2022

In 2022, three consecutive years of highly remunerative stock market returns collided with persistent inflation, the Federal Reserve pushing rates sharply higher, and Russia’s invasion of Ukraine causing food and energy prices to soar. These combined forces, abetted by high valuations, drove equities to their worst annual performance since 2008 and the Global Financial Crisis.

Q3 2022

Times of tumult, such as we’ve seen this year, warrant reflection. The pandemic and the government’s shifting focus to issues at home overshadowed the saber-rattling seen in 2019. Part of this shift included a flood of fiscal and monetary stimulus, which provided support to keep economies from succumbing to a microscopic agent, but eventually led asset prices to balloon and the economy to overheat.