What Happened: GDP up, PCE down

What Does it Mean? Annualized Gross Domestic Production (GDP) for the US was higher than anticipated, coming in at 3.3% vs. expectations for 2%. This measurement of economic health insinuates the economy remains stronger than most anticipated, however is NOT due to hotter than expected inflation. In fact, the Personal Consumption Expenditures (PCE) report was anticipated to be higher than reported, insinuating that inflation continues to fall.

Why Do we Care? In my opinion, this market remains all about the Fed and interest rates. I believe Jerome Powell and the Board of Governors were pleased to see this picture perfect scenario with growth on the rise, while inflation cools. While this may not lead to cutting rates right away, in my opinion, it closes the door on additional hikes in the near future. Stocks continue to act well to start 2024 and, in my opinion, this data only seems to enforce the bullish bias. The Federal Open Market Committee (FOMC) meets next week, and all eyes will be on the press conference to follow.

What Happened: Trump adds New Hampshire to the delegate list.

What Does it Mean? Barring a dramatic upset in South Carolina, it looks like we’ll be seeing a Trump/Biden rematch this year.

Why Do we Care? While we try hard to stay away from the political conversation, we believe it’s hard not to understand what this would mean for markets. Traditionally, the average return of a presidential year, going back to 1928 has been 11.28%. Out of the 23 election years, 19 of those years provided a positive performance while only 4 were negative. The greatest loss occurred in 2008 during the great financial crisis when Obama was elected and prior to that, the Dot Com bubble burst in 2000 when George W. Bush took office. While there’s been a lot of talk about this within the headlines, the economy remains front and center of both campaigns. From my vantage point this means the incumbents will do anything they can to keep things moving in the right direction this year, which may favor markets and stocks.

We continue to believe the theme for 2024 will be lower inflation, lower rates and money coming off the sidelines into stocks.

Quint sat down with the folks from CNBC to discuss a few stocks this week. Click HERE to see the interview or click the picture below.

 

Until next time

~ Quint

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