Changed Conditions Ahead

I have never been asked to name my favorite highway sign but, if I were, it would be the one Courtney and I saw for the first time a few weeks ago, ‘Changed Conditions Ahead’. Whoever came up with that should ask for a raise. How brilliant the warning to be on alert because the path ahead may not be as you expect, how appropriate the message for investors today.

When I wrote February’s, Waiting on the Calendar, investors were waiting on the first Fed rate cut. This is still the case as what, now two years ago, was referred to as a ‘transitory’ inflation event just refuses to decline to the Fed’s target 2% rate. As a result, the market remains headline-dependent with investors waiting on definitive Fed language or action to signal the all-clear on inflation and lower rates ahead.

However, one thing is evident: economic activity is beginning to show the tell-tale signs of a slowdown. While the severity of this economic softening remains unknown, history tells us the ultimate result will be lower rates. That means higher bond prices. It also indicates the stock market has the potential for additional, and I think, significant gains ahead.

Finally, one observation. Long ago when I was taking my pilot training, I couldn’t help but notice how organized the world seems from above. Distance and altitude cause the problems of the world to disappear into a canvas of color, neatly organized property lines, and ever-changing terrain. I think of this many times as I work to invest on your behalf. Like altitude, experience and study improves perspective and builds confidence that any investment detour through ‘changed conditions’ will likely be temporary.

Any opinions are those of Nathan Clakley and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

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