Tuesday, April 23, 2024
Another good quarter for the S&P 500 is in the books. The S&P 500 was up 10.56% while the small-cap Russell 2000 and the foreign index, MSCI-EAFE, were both up more than 5%. Our bonds, as measured
by the Bloomberg US Aggregate Bond Index, were down approximately 1%. Some analysts predicted 8-10% returns for the entire year of 2024 – not the first quarter. The stock market is a little ahead of itself
and it seems the first few weeks of April are pointing that out.
With 2% being the target inflation rate by the Federal Reserve, the last 1.5% seems to be the most difficult to tamp down over the past few months. We are currently at 3.5% inflation for March 2024. At
the beginning of the year, the Fed was predicting that they would lower the Federal funds rate by threequarters of a point by the end of the year while PIMCO, one of our bond fund managers, was predicting
a full 1% drop by year-end. With the hot inflation numbers, many now believe there will not be any interest rate cuts for the rest of the year. The theme “higher for longer” continues to be the Fed’s
marching tune.
For those with short-term bonds and money markets, this is welcome news as the yield on the money markets will continue to float around 5%. For intermediate bonds and stock funds, this is unwelcome
news. Intermediate and long-term bonds will continue to – at best – tread water with breakeven year-todate returns or – at worst – be slightly down for the year. As soon as the higher inflation numbers came
out earlier this month, stocks declined to a point where small-cap stocks are now negative for the year so far and large-caps are a few points to the positive side of things. Small-cap stocks are much more
interest rate sensitive as they are more likely to rely on debt to grow their businesses. Investors are focusing on first quarter earnings reports to hopefully help stabilize returns.
A big congratulations to CJ who passed his series 65 exam and is now a registered representative of American Investment Advisors, Inc.!
Enclosed you will find your Portfolio Holdings statement as of March 31, Performance Analysis and Position Performance summaries, a quarterly Account Management Fee Statement, and our Privacy
Policy statement. Please contact us for the latest version of the Form ADV Part 2A. Should your investment objectives or personal financial situation change, be sure to call us.
Bring on the warmer temperatures!
William A. Bullock