Market Musings 2/19/2024

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

The S&P 500 extended the end of 2023’s market optimum rising 1.6% to start 2024. We’ve seen that momentum continue into February.

🥳 January Party

The bullish end of 2023 rally extended into January. Investors remain extremely bullish for a #Goldilocks soft landing driven by moderating inflation, resilient #LaborMarkets and very aggressive #RateCuts. Markets priced in #RateCuts starting in March with expectations for 6 this year.

Despite more tech layoffs, hotter December CPI and mixed earnings, investors optimism largely shrugged off any negative data or commentary. Market rallied on growth momentum that continues to driven by #AI hype.

🎊 February Encore

Already deep into February, market euphoria hasn’t abated yet. The S&P 500 is up over 3% and has surpassed the 5,000 point milestone with #BigTech earnings hitting a home run with investors.

However, we may be starting to see some cracks after January inflation data also came in higher. It’s now back-to-months with hotter inflation data. While not disastrous, rates will likely be #HigherForLonger as the Fed will need more datapoints returning back to fall inflation levels to be comfortable to start cutting.

After the inflation data last week, markets have dialed back some expectations, but still feels too optimistic in our view. We expect more volatility near-term as #RateCuts will continue to be the story of 2024. We continue to expect the US economy will bottom this year into a mild recession. We see the market a little ahead of itself right now, but longer-term believe we’re already in the next bull market.

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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 Edoardo Tommasini.