Broker Check

Weekly Market Commentary

JUNE


June 24, 2024

ARE WE AT AN INFLECTION POINT? 

The transition to renewable energy has been moving forward and may be reaching an inflection point. In 2023, global renewable energy capacity increased by almost 50 percent, reported the International Energy Agency (IEA). Renewable capacity reached all-time highs in the United States, Europe and Brazil. However, the leader in new capacity is China. In 2023, the country “commissioned as much solar PV [photovoltaic] as the entire world did in 2022,” stated the IEA’s Renewables 2023 report.

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June 17, 2024

INFLATION IS LOWER – AND SO ARE SOME RETAIL PRICES 

There was a lot of good news last week about the cost of products and services in the United States.

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June 10, 2024

ANOTHER RECORD HIGH FOR THE STANDARD & POOR’S (S&P) 500 INDEX 

Last week, the S&P 500 Index hit its 25th record high for 2024. Investor enthusiasm for artificial intelligence helped drive the index to a new high. About 30 percent of the Index is information technology stocks.

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June 3, 2024

OVERALL, MAY WAS A GOOD MONTH FOR INVESTORS 

The adage, “Sell in May and go away,” would have been poor advice last month. Major stock indices in the United States finished the month higher. Connor Smith of Barron’s reported:

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MAY

May 28, 2024

PERCEPTION VERSUS REALITY 

A recent Harris poll, conducted on behalf of The Guardian newspaper, found that there is some confusion about the state of the American economy and U.S. stock market performance. A significant proportion of the Americans who participated think the economy and the stock market are in rough shape. Here are a few of the misperceptions uncovered by the poll: 

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May 20, 2024

READING THE ECONOMIC TEA LEAVES 

Tasseography practitioners read tea leaves to forecast the future. Some economic data serve a similar purpose. Policymakers, central bankers, economists, and investors look at leading economic indicators to forecast where the economy may be headed. Classic leading indicators include:

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May 13, 2024

HIGHER RATES ARE DOING WHAT THEY’RE SUPPOSED TO DO 

Last week, Federal Reserve officials spoke about keeping the federal funds rate higher until it becomes clear that inflation will reach the Fed’s two percent target rate. 

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May 6, 2024

WHAT WILL THE FEDERAL RESERVE DO? 

Uncertainty about the direction and timing of Fed rate cuts is causing stock markets in the United States to charge and retreat. U.S. stocks rallied for five consecutive months (anticipating rate cuts early in 2024) before retreating in April after higher-than-anticipated inflation suggested the Fed might delay any rate reductions.

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APRIL

April 29. 2024

THE ECONOMY APPEARS TO BE SLOWING DOWN. 

Last week, many investors were focused on economic data. The Personal Consumption report offers information about Americans’ income and spending over the previous month. It includes one of the Federal Reserve’s preferred inflation gauges, the personal consumption expenditures (PCE) price index. The March report showed:

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April 22. 2024

INVESTORS HAVE BEEN RECALIBRATING THEIR EXPECTATIONS 

There is a lot going on in the world that could affect the value of financial markets – wars, tensions between major powers, a strong dollar, and rising oil prices – just to name a few. Last week, it was Federal Reserve policy. The possibility that the Fed might keep rates higher for longer shook investors, reported Naomi Rovnick of Reuters.

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April 15, 2024

INFLATION AND GEOPOLITICS AND EARNINGS. OH, MY! 

It was a rough week for stock markets. “The S&P 500 closed 1.5% lower on Friday, while the Nasdaq Composite dipped 1.6%. Every S&P 500 sector closed lower—and just about 40 stocks in the index finished the day with gains,” reported Connor Smith of Barron’s.

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April 8, 2024

THE BULL CHARGED FROM OCTOBER 2023 THROUGH MARCH 2024. LAST WEEK, IT TOOK A BREATHER 

Optimistic may be the best word to describe the first quarter of 2024. From the start of the year, investors were confident that an economic soft landing in the United States was possible. The U.S. stock market reflected investors’ conviction that:

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April 1, 2024

WHAT DO DIETERS HAVE IN COMMON WITH THE FEDERAL RESERVE? 

If you’ve ever dieted, you may be familiar with the weight-loss plateau. Many people experience steady progress. The bathroom scale moves lower week by week – until it doesn’t – and that can be discouraging.

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MARCH

March 25, 2024

THE CENTRAL BANKS HAVE SPOKEN 

No one expected the United States Federal Reserve to announce a rate change last week – and it didn’t. But Fed Chair Jerome Powell’s comments and the actions of other central banks led to new records being set in stock markets around the world, reported Randall Forsyth of Barron’s.

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March 18, 2024

HERE’S THE TEA ON STOCK MARKETS AND PRESIDENTIAL ELECTIONS 

Last week, a slew of headlines mentioned stock market bubbles and frothy valuations. The implication was that markets might be headed lower because they’ve risen so high. Last Wednesday, Lewis Krauskopf of Reuters reported:

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March 11, 2024

THE WEEK GOT OFF TO A GOOD START 

In testimony before House and Senate committees, Federal Reserve (Fed) Chair Jerome Powell noted that prices had been falling and unemployment rates remained quite low. As a result, he expected the Fed to begin lowering the federal funds rate in 2024.

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March 4, 2024

THE BULL MARKET IS ALIVE AND WELL 

“We know what investors are thinking,” reported Jacob Sonenshine of Barron’s. “The gains can keep coming, driven by an economy that is neither too hot nor too cold…The economy is growing, but only moderately, and the Federal Reserve can keep thinking about when it can start cutting interest rates…This dynamic is why nobody wants to miss out on the rally—and why they think it can keep going. A recent survey from Investors Intelligence shows the number of bulls outnumbered their bearish counterparts by the widest margin since late 2021.”

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FEBRUARY


February 26, 2024

OPTIMISM ABOUNDS! 

Enthusiasm for everything related to artificial intelligence (AI) drove a global stock market rally last week. Equity markets in the United States, Europe, and Japan hit all-time highs after a leading chipmaker reported better-than-expected earnings and an extraordinary surge in demand for its artificial intelligence-targeted processors, wrote Rita Nazareth of Bloomberg.

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February 20, 2024

DON’T FIGHT THE FED

The Federal Reserve (Fed) is the central bank of the United States. A longstanding bit of investment wisdom is: Don’t fight the Fed. It means that investors should align their strategies with the Fed’s monetary policy. Economic growth is influenced by Fed policy, and stock markets tend to reflect the economy, rising when it grows and falling when it contracts. As a result, Kent Thune of The Balance reported, when the Fed is:

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February 12, 2024

CHINA IS OUT OF FAVOR WITH INVESTORS

For decades, China was among the fastest-growing economies in the world. Its real gross domestic product, which is the value of all goods and services it produces, grew by about nine percent a year, on average, from 1978 through 2022, according to The World Bank. However, the pace of economic growth in China slowed over the last decade and dropped sharply during the pandemic.

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February 5, 2024

WE’VE BEEN HEARING A LOT ABOUT LAYOFFS 

Last week, the January 2024 Challenger Report found that employers based in the United States cut more than 82,000 jobs in January. That’s a lot. In December 2023, about 35,000 layoffs were announced. The January job cuts were concentrated in a few industries, and the reasons for the cuts included companies restructuring to lower costs and reorienting toward artificial intelligence.

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JANUARY

January 29, 2024

EVEN BETTER THAN EXPECTED! 

The United States economy is not performing the way anyone thought it would. Instead of tipping into a recession last year, it crushed expectations. Gross domestic product, which is the value of all goods and services produced in the country, expanded 2.5 percent, after inflation, for the year.

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January 22, 2024

ARE YOU FEELING OPTIMISTIC OR PESSIMISTIC? 

Consumers are a force to be reckoned with – and we’re all consumers. We buy coats and tweezers, electricity and bread, screens and fishing poles. We download apps and games and educational materials. As consumers, we are vital to the American economy. In fact, consumer spending accounts for about two-thirds of the U.S. economy when it’s measured using gross domestic product or GDP. 

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January 16, 2024

IS INFLATION RETREATING? 

Last week, we received a lot of information about inflation. Some seemed to support the idea that inflation was sticky, meaning it wasn’t moving lower, while other data suggested inflation was in retreat. Here’s what we learned:

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January 8, 2024

AND WE’RE OFF…TO A SLOW START 

Last week, investors appeared to suffer from a New Year’s hangover. The culprit was too much optimism.

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January 2, 2024

2023 WAS A BIG YEAR FOR U.S. STOCKS 

The story of 2023 has its roots in 2022, when the Standard & Poor’s (S&P) 500 Index lost almost 19.5 percent amid rising inflation and aggressive Federal Reserve rate hikes. As 2022 came to a close, many on Wall Street predicted further pain in the new year. Economists forecasted a 70 percent chance of recession in 2023, and consumer and investor confidence were both low.

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December

December 26, 2023

IF ALL YOU WANTED FOR CHRISTMAS WAS TWO PERCENT INFLATION, YOU’RE IN LUCK! 

Barring unforeseen events, it appears the United States Federal Reserve (Fed) is on the cusp of accomplishing a feat many thought impossible – reducing inflation without causing a recession. 

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December 18, 2023

HAVE RATES PEAKED? 

Last week, at its final policy meeting for 2023, the United States Federal Reserve indicated that rates may have peaked. After the meeting, Chair Jerome Powell said:

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December 11, 2023

STILL EXCEEDING EXPECTIATIONS

Last week, the United States Treasury market rallied. Yields fell and bond prices rose as some bond market investors enthusiastically embraced the idea that the Federal Reserve will soon change course. Michael Mackenzie and Rich Miller of Bloomberg explained:

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December 4, 2023

WE’RE CYCLING ALONG 

It’s easy to forget that economic activity tends to move in cycles. A full cycle, known as the business cycle, typically includes four stages:

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November

November 27, 2023

IN NOVEMBER, INVESTORS WERE MORE OPTIMISTIC THAN CONSUMERS 

At the start of November, investors were decidedly bearish. During the week of November 1, the AAII Investor Sentiment Survey found that about 50 percent of respondents were pessimistic about the prospects for stocks over the next six months, and about 24 percent were bullish. The current historic averages are 31 percent bearish and 37.5 percent bullish. (The remainder are neutral.) 

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November 20, 2023

IS IT DONE? (WE’RE NOT TALKING ABOUT TURKEY) 

Last week, investors enthusiastically embraced the idea that the Federal Reserve (Fed) could be done raising rates – and that it might even begin to lower them. As conviction about the possibility of rate cuts increased, stock and bond markets rallied, reported Koh Gui Qing and Dhara Ranasinghe of Reuters.

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November 13, 2023

WILL THERE BE A YEAR-END RALLY? 

Four times a year, during earnings season, publicly traded companies report how well they performed during the previous quarter. The strength of corporate earnings – also known as bottom-line profits – is one of the economic indicators that investors watch closely. 

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November 6, 2023

WILL THERE BE A YEAR-END RALLY? 

Last week, there was a lot of speculation about whether the United States will see a year-end stock market rally. Some say yes, and some say no.

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October


October 30, 2023

THE MARK TWAIN EFFECT? 

Historically, economic theory was based on the idea that financial decisions were grounded in rational thought. In recent years, behavioral economists have recognized that people don’t always behave rationally. In fact, research has found that investors like shortcuts that help simplify decision-making. While rules of thumb can be helpful, it’s important to use common sense. Some investment theories are a bit wacky, such as:

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October 23, 2023

MARKETS WERE RESILIENT 

Today, investors have a myriad of worries that are creating tremendous uncertainty. A September Investopedia survey found investors are concerned about how their investments may be affected by: 

  • Inflation (59 percent),
  • The upcoming election (52 percent),
  • A possible recession, (51 percent)
  • Higher interest rates, (51 percent)
  • S.-China tension, (44 percent)
  • War in Ukraine (35 percent),
  • The United States’ credit rating downgrade (33 percent),
  • Climate disasters (20 percent), and other issues. 

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October 16, 2023

MARKETS WERE RESILIENT 

Last week, investors had a lot to process – geopolitics, inflation, consumer sentiment, the possibility of government shutdown – and markets were volatile. Toward the end of the week, some investors were reassured when earnings season kicked off with reports showing major banks posted stronger-than-expected profits during the third quarter. Here’s a brief look at what happened during the week:

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October 9, 2023

FINANCIAL MARKETS LOST GROUND DURING THE THIRD QUARTER

While year-to-date returns for the Standard & Poor’s (S&P) 500 Index remain above the historic average, which was 10.24 percent, including dividends, from 1973 to 2022, the rally in U.S. stocks stalled during the third quarter of 2023, reported Lewis Krauskopf, Ankika Biswas and Shashwat Chauhan of Reuters.

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October 2, 2023

INFLATION IS SLOWING BUT CONSUMERS AREN’T FEELING IT 

In August, for the first time in two years, inflation (excluding volatile food and energy costs) dropped below four percent. Last week, one of the Federal Reserve (Fed)’s favored inflation measures – the Personal Consumption Expenditures (PCE) Price Index – indicated that prices rose 3.9 percent, year-over-year, in August 2023. That’s an improvement from January, when prices rose by 4.9 percent, year-over-year, but it remains above the Fed’s target of 2 percent.

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September 

September 25, 2023

HOW HIGH WILL THEY GO? 

Just as the market anticipated, the Federal Reserve Open Market Committee (FOMC) chose not to raise interest rates last week. However, Fed officials made it clear another rate increase might be necessary before the end of 2023 as continued economic strength, higher energy prices, robust consumer spending, and rising wages in a strong labor market have kept upward pressure on inflation.

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September 18, 2023

ADDING NEW INGREDIENTS TO THE ECONOMIC BLENDER. 

The performance of United States economy in 2023 has been as unexpected as a lentil-avocado-cinnamon smoothie – a tasty surprise. Last week, economic data suggested the Federal Reserve may need to do more to slow the economy. The consumer price index showed inflation edging higher, wholesale inflation was higher than expected (largely due to higher energy prices), and retail sales were healthy.

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September 11, 2023

ALL THE WORK, WORK, WORK

2023 has been a remarkable year so far. It has, “confounded economists, humbled forecasters, and rewarded investors. Despite a rapid rise in interest rates, the U.S. economy continues to grow. Inflation has fallen – if not quite to desired levels – and stocks have entered a bull market, with the S&P 500 gaining 17% year to date and the Nasdaq Composite up more than 30%,” reported Nicholas Jasinski of Barron’s.

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August

August 28, 2023

BECALMED 

The Chinese government’s zero-COVID policy took the wind from the sails of its economy. When the government finally ended the policy earlier this year, many economists anticipated that pent-up consumer demand would refill China’s economic sails, lifting the global economy, reported Malcolm Scott of Bloomberg. Instead, China’s economy is in an economic doldrum, recovering far more slowly than anyone anticipated. As a result, economists have steadily lowered 2023 growth forecasts for the country, reported Yahoo Finance and Diane King Hall.

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August 21, 2023

HIGHER BOND YIELDS MAY BE GOOD FOR INCOME INVESTORS – AND NOT SO GOOD FOR STOCK MARKETS 

After more than a decade of near-zero interest rates, the “free money” era – a time when people and businesses could borrow money and repay it with very low (or no) interest – may be over. 

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August 14, 2023

CONSUMER SENTIMENT IS A LAGGING INDICATOR. IT’S ALSO A CONTRARIAN INDICATOR 

After rising sharply in June and July, consumer sentiment leveled off this month. The preliminary August reading for the University of Michigan Consumer Sentiment Index was 71.2. That’s slightly below July’s reading, although it’s up 22.3 percent year-over-year, and up 42 percent from its all-time low of 50 (June 2022). The historic average for the Index is 86. 

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August 7, 2023

CENTRAL BANK PALOOZA! 

Last week, Fitch Ratings startled markets by lowering the credit rating of United States Treasuries from AAA to AA+. It was the second rating agency to downgrade U.S. Treasuries; Standard & Poor’s cut its rating to AA+ in 2011, reported Benjamin Purvis and Simon Kennedy of Bloomberg.

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July

July 31, 2023 

CENTRAL BANK PALOOZA! 

While music lovers attended concerts and festivals across the United States, central banks had a lollapalooza of their own. The U.S. Federal Reserve (Fed) led things off last Wednesday, followed by the European Central Bank (ECB) on Thursday, and the Bank of Japan (BOJ) on Friday. Here’s what happened:

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July 24, 2023 

BETTER THAN EXPECTED. 

In January of this year, the Bloomberg’s MLIV Pulse survey collected and shared investors’ expectations for stock markets. Survey participants were generally a gloomy group. Seventy percent believed the United States stock market would move lower in 2023, and most indicated the drop would happen in the latter half of the year, according to Jess Menton and Liz Capo McCormick of Bloomberg. The pair reported: 

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July 17, 2023 

DISINFLATION WAS IN THE AIR!

To the great relief of the Federal Reserve, the American economy has been experiencing “disinflation,” which is a slowdown in the rate of inflation. For example, last week we learned that: 

Inflation fell to a two year low in June. The Consumer Price Index (CPI) showed that prices rose just 3 percent from June 2022 through June 2023. That was lowest inflation has been in two years, reported Augusta Saraiva of Bloomberg.

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July 10, 2023 

MARKETS ARE PLAYING FEDERAL RESERVE (FED) CLUE 

Last week, investors parsed the monthly Employment Situation Summary from the Bureau of Labor Statistics for clues about whether the Fed will raise the federal funds rate at its next meeting or leave the rate unchanged, reported Megan Leonhardt of Barron’s. The Fed has been aggressively raising the rate to slow the pace of inflation. Higher rates typically lead to slower economic growth and fewer jobs, so the employment report offers some signals about the Fed’s progress so far and what may come next.

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July 3, 2023 

SHOWING REMARKABLE RESILIENCE 

Throughout the first half of 2023, the U.S. economy and financial markets proved to be resilient – and so did investors. U.S. stock markets moved higher amid enthusiasm for artificial intelligence and expectations that the Federal Reserve’s tightening cycle might be near an end. The Standard & Poor’s 500 Index entered a bull market and the Nasdaq Composite Index delivered its best first-half performance in 40 years, gaining more than 30 percent over the period, reported Barron’s.

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June

June 26, 2023 

The Artificial Intelligence (Ai) Express Is Traveling Fast 

Investors are enthusiastic about AI. Late last year, an AI research lab introduced a chatbot that could answer questions – and people were enthralled. Within two months of its introduction, more than 100 million people had engaged with the technology, reported David Curry of Business of Apps. It wasn’t long before AI platforms that could generate images and audio, and help with coding were released

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June 20, 2023 

REBALANCING AHEAD! 

There is one decision all investors should make: how to allocate the money they’re investing. Asset allocation decisions are usually based on a myriad of factors: expected returns, potential volatility, and appetite for risk, among others.

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June 12, 2023 

Leaping Over The Wall Of Worry 

The “wall of worry” is an obstacle – or set of obstacles – that investors face. This year, the wall reached a considerable height as inflation, the War in Ukraine, United States-China tensions, slower earnings growth, the high cost of residential real estate, low demand for commercial real estate, tightening credit conditions, and other issues weighed on investor confidence and consumer sentiment.

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June 5, 2023 

As Gomer Pyle used to say, “Surprise, surprise, surprise!” 

Gomer Pyle USMC was a popular American sitcom in the 1960s. It focused on a naïve, do-gooding auto mechanic from Mayberry RFD who joined the military. Gomer Pyle, the much-loved main character, was known for catchphrases such as shazam, golly, and surprise, surprise, surprise.

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