By: Chad Meyer, CFA
As we enter the second half of 2023, equity investors look back at an impressive year-to-date stock market performance with the three most popular indices solidly positive. The S&P 500 is up 17% for the year, the Nasdaq Composite has risen a whopping 32% and the Dow Jones Industrial Average (DJIA) finished up 5%. (more…)
By: Chad Meyer, CFA
In a market that can be difficult to anticipate, there’s a simple pleasure to seeing spring arrive right on time. And if the April weather outside of our office is any indication, it would seem that May is planning to make a colorful entrance, indeed.
By: Eric Schopf
The first quarter of 2023 delivered strong returns in the stock and bond markets. The Standard and Poor’s 500 total return was 7.5%, while the Bloomberg Aggregate Bond Index return was 2.69%, which was a welcome relief following a 13.01% loss in calendar 2022. These strong returns masked the turbulence created by the latest Federal Reserve inflation-fighting interest rate increases. Casualties from the fight included two large regional banks, and the Fed must now contend with both persistent inflation and a vulnerable banking sector. The remedies for each seem to be contradictory.
By: Barb Rishel
Although Qualcomm (ticker: QCOM) is not a household name, its products are an essential part of everyday life. QCOM is transforming the way we work, live and communicate so we can stay intelligently connected using state-of-the-art proprietary semiconductor chips and software. QCOM is the world’s leading supplier of chipsets for mobile phones, tablets and modems, and it receives a steady stream of royalty revenue from their extensive wireless patents.
By: Alex Olshanskiy
In a world where inflation is uncertain and a recession seems very possible, productivity is essential for growth and stability. The U.S. Bureau of Labor Statistics states “with growth in productivity, an economy is able to produce—and consume—increasingly more goods and services for the same amount of work.” One potential catalyst to limit the possibility of “low economic growth” and perhaps a recession comes from advancements in the technology sector—more specifically—Artificial Intelligence or AI.
By: Chad Meyer, CFA
For all of its joys, the holiday season also has a well-documented history as a source of stress. And while they couldn’t all have been hosting their in-laws for an extended visit, American investors certainly bore the brunt of that phenomenon this past December. As trees were lit and skis were waxed, market commentary ranged from stunned disbelief to gallows humor. Perhaps nowhere was the mood more accurately captured than in the Wall Street Journal’s Christmas Eve headline: “On the Bright Side, The Market Closes Early Today.” Bah humbug, indeed.
By: Eric Schopf
The year 2022 was defined by broad inflationary pressures and the Federal Reserve’s efforts to reestablish price stability. Two additional interest rate hikes during the fourth quarter demonstrated the Fed’s resolve. The federal funds rate stood at just 0.25% as recently as March, but following seven rate increases, the rate closed the year at 4.5%. The goal of all central bankers during an inflationary cycle is to engineer a soft landing by reducing inflationary pressures through higher interest rates. The trick is to raise interest rates high enough to contract demand without tipping the economy into recession.
By: Alex Olshanskiy
Currency can impact expenses and revenues. Many quarterly updates by companies in 2022 consisted of negative results due to a strong dollar. This was especially the case with technology companies that are included in the S&P 500 Information Technology Index, which generate a majority of its revenue (57.8%) outside of the United States. If you were lucky enough to travel overseas in 2022, you may have experienced the benefits of a stronger dollar since purchasing power for U.S. citizens increased on international products and services.
By: Rick Rubin, CFA
The SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement) builds on the SECURE Act of 2019 and was signed into law on December 29, 2022. The legislation provides many changes that could help strengthen and improve the retirement system in America.
By: Chad Meyer, CFA
As the temperature finally drops, the landscape subtly shifts, and children everywhere resignedly dig out their real shoes and dust off their textbooks, it’s difficult not to take pleasure in the perennial change that autumn brings. After all, and as anyone who’s watched more seasons pass than they care to admit knows, this brand of change—the predictable kind—doesn’t really count as change at all. Instead, it represents a keeping of plans and all the comforts that come with knowing the world is still spinning right on schedule.
By: Eric Schopf
The third quarter was an extension of the second. Red-hot inflation, tight labor markets, war in Ukraine and sporadic Covid-related shutdowns in China all weighed on the financial markets. The Federal Reserve responded to inflationary market conditions with two more 75 basis point interest rate increases, and the result was additional drawdowns in the stock and bond markets. The Standard & Poor’s 500 index delivered at total return of -5.9% while the Bloomberg US Intermediate Government/Credit index declined 3.1% during the quarter. For the year, the S&P 500 has declined 23.9% and the intermediate-term Bloomberg fixed income index is down 9.6%. Longer term fixed income returns have fared even worse, with the Standard & Poor’s Treasury Bond Current 10-year index down 16.7% year-to-date.
By: Alex Olshanskiy
The COVID-19 pandemic that started in 2020 sparked an unprecedented flow of money from the government. This broadly based stimulus flowed into every area of the market, sending the market on a wild ride—spurring inflation—and eventually giving rise to a bear market. Investors will find that our value investing strategy will help with soaring inflation and market performance.
By: Chad Meyer, CFA
As humidity takes hold and Fourth of July memories fade, there’s just no denying it. The dog days of summer have officially arrived. And while it’s no surprise for market activity to “cool off” around this time of year, one cannot help but suspect there’s more than the usual pre-Labor Day lull currently at work in the financial world. In this space roughly twelve months ago, I described the second quarter of 2021 as “frothy times,” characterized by the feeling that almost any stock was a winner. Looking back over the last six months, it’s clear that froth has given way to a drastically more cautious mood, due in no small part to a collective acknowledgement that uncertainty is the new normal. The view from the beach, it would seem, now includes whitecaps.
By: Eric Schopf
If the first quarter was a struggle for the financial markets, the second quarter was just plain painful. Two additional interest rate increases by the Federal Reserve have heightened awareness for a potential recession, and the stock market reaction was a 16.2% retreat in the Standard & Poor’s 500 Index. The bond market provided some protection but still delivered negative returns. Yields on the 10-year United States Treasury note moved from 2.32% to 2.97%. The Bloomberg US Intermediate Government/Credit Index, which tracks the performance of intermediate term U.S. government and corporate bonds with an average maturity of about 4.5 years, declined 2.37% during the quarter. For the year, the S&P 500 has declined 19.96% and the Bloomberg fixed income index is down 6.77%.
By: Scott Murphy
On June 13th, the S&P 500 tumbled into a bear market. It fell about 20% from the most recent high reached in January of 2022. In the post-World War period from 1945 to the present, there have been fourteen bear markets, ranging in length from one month to 1.7 years, and in severity from a 20.6% drop to a 57% decline in the S&P 500.
