Summer 2024 Commentary

In Michigan, summer is a time to get out of the house and enjoy the beautiful, warm weather. Trips to the beach and even vacations abroad are plentiful. Consumers are happy and therefore likely to spend quite a bit of their discretionary income. With brighter days ahead, one would expect the economic outlook to be optimistic. Unfortunately, we have recently seen several important economic data points rolling over – suggesting caution may be warranted. Several blue chip consumer brands reported lackluster Q1 earnings – especially Starbucks, Kohl’s, McDonald’s and Nike. Their respective management teams threw water on bullish economic forecasts with very conservative second half outlooks. This negatively compares to the improving, stronger-than-expected economic growth experienced last year. So, what gives?

Spring 2024 Commentary Videos

We hope you enjoy the videos and find our comments informative and beneficial. We encourage and welcome your feedback. This video contains general market commentary and information that should not be construed as advice to make any specific investment. For investment advice, please consult with your portfolio manager. Our quarterly market commentary often contains forward-looking statements, predictions and forecasts (“forward-looking statements”) concerning our beliefs and opinions with respect to the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Investing involves the risk of loss, including risk of loss of principal invested, that clients should be prepared to bear.

Spring 2024 Commentary

Jerome Powell and his colleagues at the Federal Reserve deserve a ton of credit. They have successfully navigated a very challenging economic tightrope coming out of the pandemic. Interest rates are ‘normal’ once again – and the economy seems to be in a pretty good place. Monetary policy tightening / rate hikes have done their job. Inflation continues to rollover toward the Fed’s ultimate goal of 2%. Jobs are plentiful and the unemployment rate remains near full employment by historical standards – with recent readings just below 4%. Consumers, benefitting from solid job prospects, stable interest rates and significant stock market gains (helping 401Ks) over the last year, continue to spend their increased purchasing power (wage gains > inflation). In fact, the National Retail Federation recently forecasted $5.3 trillion of total consumer spending – up 2.5 to 3.5% this year (see chart below left). This compares to the 10-year pre-pandemic average annual sales growth rate of 3.6%. With our economy primarily driven by the consumer, economic growth estimates have risen & the economic bears remain in hibernation.

Winter 2024 Commentary

The economy seems to be on firm, but not quite solid, footing. While 2023 saw an acceleration of economic growth spurred by inflation (and price increases), it looks as though 2024 will experience moderating economic growth. Hence, our forecast for a ‘soft-ish’ economic landing is still on the table. As usual, there are numerous data points that have us cautious. Specifically, on the jobs front. December job openings (JOLTS report) came in weaker-than-expected at 8.79 million jobs – its lowest reading since March 2021. The hiring component within the report was the weakest since March 2020. The manufacturing sector remains cool as well. The ISM Manufacturing Index December report came in sub-50 (economic contraction) once again at 47.4. It was the fourteenth consecutive month that the manufacturing sector declined – its longest stretch since 2002! However, not all is gloom-and-doom with our domestic economy.

Winter 2023 Commentary Videos

We hope you enjoy the videos and find our comments informative and beneficial. We encourage and welcome your feedback. This video contains general market commentary and information that should not be construed as advice to make any specific investment. For investment advice, please consult with your portfolio manager. Our quarterly market commentary often contains forward-looking statements, predictions and forecasts (“forward-looking statements”) concerning our beliefs and opinions with respect to the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Investing involves the risk of loss, including risk of loss of principal invested, that clients should be prepared to bear.

Fall 2023 Commentary Videos

We hope you enjoy the videos and find our comments informative and beneficial. We encourage and welcome your feedback. This video contains general market commentary and information that should not be construed as advice to make any specific investment. For investment advice, please consult with your portfolio manager. Our quarterly market commentary often contains forward-looking statements, predictions and forecasts (“forward-looking statements”) concerning our beliefs and opinions with respect to the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Investing involves the risk of loss, including risk of loss of principal invested, that clients should be prepared to bear.

Fall 2023 Quarterly Commentary

Sometimes headline numbers do not tell the whole story. For example, you would think that the Atlanta Fed’s GDP Now third quarter economic growth estimate near 5% would have market participants dancing in the streets. Well, the opposite seems to be true. Both the stock and bond markets have been selling off of late. Stock investors are fearful that interest rates will stay higher-for-longer. Bond investors are on edge about a lack of a budget deal coming out of Washington D.C. & sticky inflation artificially buoying growth. On the surface, our economy is doing okay. However, beneath the numbers, there are signs that suggest we should put away our rose-colored sunglasses.