Perspectives

This previous election has drawn historical comparisons to the election victory in 1980. Both elections underscored debates between approaches favoring government expansion and those prioritizing tax reforms and deregulation. Market reactions to both elections were positive, with the S&P 500 showing gains as confidence in the candidates’ policy proposals grew. Following the elections, markets appeared to respond favorably to policies emphasizing tax reductions and regulatory reform, while … View More

Ten-year Treasury yields bottomed at roughly 3.57% about two days before the Fed first cut its Fed Funds rate by 50 basis points on September 18th. The bad news, obviously, is that rates have backed up by 70 basis points since then. The good news is that our work has shown that this rise has been due more to expectations for stronger real growth rather than growing inflationary expectations. Unfortunately, the rate cuts have not yielded any easing in the housing market as had been hoped. Mortga… View More

Equities fell last week (S&P 500 -1.35%), marking the second weekly decline in a row. Large technology was the drag, with Treasury yields continuing to rise. Best sectors were communication services (+1.53%) and consumer discretionary (+0.48%); worst sectors were technology (-3.27%) and real estate (-3.05%).   Key Takeaways:   Real GDP in 3Q was solid, growing 2.8% q/q versus 3.0% in Q2. Nominal GDP slowed to 4.7% from 5.6%. Government spending alone added 0.9%, meaning private real … View More

This phenomenon is undoubtedly a function of what Giscard d’Estaing deemed the “exorbitant privilege” of possessing the world’s reserve currency. Financially speaking, you can get away with murder. More than 54% of America’s debt matures in the next three years. The weighted average cost of our debt is 3.39%, or a level lower than every part of the yield curve. Without a meaningful decline in interest rates and inflation – or another round of QE – America’s interest expense, alr… View More

As The Strategas Washington team has repeatedly reminded us this year, election years, especially those in which incumbents are running, tend to be quite good for stocks. With only 14 days until election day and the market up almost 24% YTD, it seems like a good past will be prologue. Perhaps more interesting now is what performance might look like postelection day. As one might suspect, the average gain from election day until the end of the year is also positive, albeit smaller. There was only… View More

U.S. equities rose for the fifth week in a row (S&P 500 +1.13%) closing at an all-time high. Banks were strong as Friday earnings boosted the stocks. Treasuries were weaker (the 10-year yield is up 35 basis points [bps] over the past eight sessions.) Best sectors were technology (+2.51%) and industrials (+2.11%); worst sectors were utilities (-2.55%) and communication services (-1.28%).   Key takeaways:   Core CPI was +0.3% (above consensus of 0.2%). Headline CPI was +0.2% (above con… View More

While 2Q24 was characterized by narrow market leadership and a hawkish repricing of Fed rate-cut expectations, 3Q saw solid performance from a wider spectrum of companies and increasing expectations for rate cuts in 2024. Please see our 3Q Review below for additional insight...   3Q Review U.S. equities rose again in Q3 for the fourth consecutive quarter (S&P 500 +5.5%. NASDAQ +2.6%, and Russell 2000 +8.9%). The S&P 500 hit all-time highs in mid-July but slid in early August, rallyin… View More

Stocks advanced again last week (S&P 500 +0.64%) as the equal-weighted index continued to outperform the cap-weighted index. The big stories last week included the China stimulus and a respectable core PCE report. The best sectors were materials (+3.39%) and consumer discretionary (+1.75%); the worst sectors included healthcare (-1.11%) and energy (-0.82%).​​   The U.S. economy is beginning to struggle due to high price levels, high and rising consumer debt, and, in many industries,… View More

This is the second-longest period between the Fed's last rate hike and the first cut (146 days). However, the return during the current pause has been the strongest. Going back to 1995, Consumer Staples, Health Care, and Utilities have been the strongest performing sectors after the first Fed rate cut in a series. The real 10-year Treasury yield and the real Fed Funds rate are approaching levels that preceded recessions and would be considered “tight.” The price of gold has risen 35% in… View More

Friday’s employment report suggests the US economy may be slowing down faster than most investors think. Nonfarm payrolls increased by 142,000 in August, but revisions to June and July brought the net gain down to a modest 56,000. And the details were worse. We like to follow payrolls excluding three sectors: government, education & health services, and leisure & hospitality, all of which are heavily influenced by government spending and regulation (including COVID lockdowns and reope… View More