Spring 2024

“I don't mind going back to daylight saving time. With inflation, the hour will be the only thing I've saved all year.” -Victor Borge

In trying the find a good quote on inflation, this is the only one on a long list that made us smile knowingly. More on that subject later, but first a review. Into October last year, the fears for 2024 were of coming recession and a slowing economy. As we rolled into December, markets predicted 5-6 rate cuts in the coming year, the slow down never materialized, and valuations ramped up accordingly. Fast forward a bit and “higher for longer” is the mantra of the day when discussing fed funds rates. Today, there are even fed governors talking about the potential for fed fund rate hikes.

Low unemployment, rising wages and positive corporate earnings are pushing the US economy forward stronger than most other developed economies in the world. It seems we still hold the title of cleanest dirty shirt. Though, all these factors are what keeps inflation persistently higher than the Fed would prefer.

First quarter performance reflects a positive outlook in the US equity indexes. The rocket ship trajectory in stocks of November and December continued through the end of March. Though, it seems we have hit an air pocket in April as the world recognizes rates aren’t moving down quickly and the market is driven by few, very large growth stocks, aka the Magnificent Seven, whose performance has moderated. Talking indexes for a moment will help give perspective on the real economy: as of April 16, 2024 the S&P 500 is up 5.90% for the year, the Dow Jones is up 0.29% and the Russell 2000 (small and mid-cap companies) is down (2.94)%.

The above illustrates the real economy (more like companies that make up the Dow and the Russell) is struggling to deal with the continuing inflation, higher interest rates, and slowing consumer spending. The strongest parts of the markets, in the S&P, are high tech companies with high margins and valuations being juiced by AI related interest. Just the mere mention of AI is a market mover on an earnings call. This reminds us of the classic quote from The Graduate: “There’s a great future in plastics. Think about it.” Sure, AI is transformational, but it is also ethereal – being used everywhere for everything. For us, it is hard to define well and even harder to invest in at a reasonable valuation. It doesn’t mean we don’t have related investments, we do, but it means we are being careful stewards of y(our) capital in a hot sector of the market.

Going forward, we look at a positively inclined market view remaining optimistic in an election year, whatever your politics might be. Keeping it economically framed – both party heads seem to deficit spend, which is not good for the long run but serves its purpose in the short run. We may see normal summer turbulence, but a general uptrend should outlast the recent backslide, which we see as normal digestion of a hyperbolic Q1, not indigestion.

In some positive personal news, Bill has joined the board of The Boys and Girls Club of Miami-Dade with Peter and also the board of Ransom Everglades. Michael was named Chair of History Miami Museum. This is a testament to our team’s underlying commitment to bettering the community through volunteer service.

No matter what comes, we will help you navigate it, keeping eyes forward and your goals in sight. Thank you for your continuing trust in our guidance.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investments mentioned may not be suitable for all investors. Past performance may not be indicative of future results. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Any opinions are those of Peter Bermont, Michael Gold, & Bill Bermont not necessarily those of Raymond James. The companies engaged in the communications and technology industries are subject to fierce competition and their products and services may be subject to rapid obsolescence. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA),commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Raymond James is not affiliated with the above mentioned organizations.