Market Musings 1/3/2024
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
December was an exciting conclusion to an outstanding 2023 for our portfolio. We strongly outperformed again in December from our #Flight2Safety Value tilt and overweight Financials allocation. It capped an already strong aggregate portfolio performance for the year. We’re excited to continue our momentum into 2024!
It was a very Merry Christmas for investors in December picking up right where November left off. The S&P 500 gained another 4% to end the year and ended 2023 up 24%.
The story of the year was #RisingYields. While expectations for incoming rate hikes tanked 2022, markets were optimistically looking forward to the end all year. Despite higher and higher rates, investor hopes were buoyed by quickly moderating inflation and resilient macro data.
While teased in November, markets finally got the Christmas gift they were waiting for in December. The Fed held rates flat at 5.25% to 5.5% and signaled #RisingYields rate hikes were likely over. Markets responded with the S&P 500 adding to November’s gains and almost returning to all-time highs from the beginning of 2022.
Heading into 2024, all eyes will now be on #RateCuts. Macro data shows economic activity slowing, but moderate enough for the coveted #Goldilocks soft landing. Markets are expecting rates to fall to 3.75% to 4% by the end of the year with the first cut in March. While we still believe the market may be a little ahead of itself hoping for a quick turnaround on #RateCuts, we are more optimistic now for the economy to bottom into a mild recession this year.
While markets may still be volatile near-term, we recommend long-term investors continue to build positions more aggressively here.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.