Perspectives

Lately, there has been much discussion about how soon the Fed will have to cut rates as many believe they are too restrictive. While we are cautious about the ultimate message rates have for equities, we are even more concerned about how little balance sheet runoff is discussed in the context of cuts. If we look back to 2019, the last time the Fed began cutting rates during balance sheet runoff, the runoff lasted just a few more weeks before the Fed ultimately had to reverse course due to repo m… View More

The S&P 500 was up (+0.8%) for the fifth week in a row. Small cap stocks again powered higher (Russell 2000 +0.1%). Treasuries had a strong week with the ten-year yield falling 25 basis points. Best sectors were real estate (+4.7%) and materials (+2.8%); sectors losing ground included communication services (-2.5%) and energy (-0.1%). Source: Bob Doll, Crossmark Investments   Chart reflects price changes, not total return. Because it does not include dividends or splits, it should no… View More

Don’t forget to give to Charity this Holiday Season! As the end of the year and the holiday season approaches, we will all see an uptick in charitable solicitations arriving in our mailboxes and by email. Since some charities sell their contributor lists to other charities, frequent contributors may find themselves besieged by requests from various charities with which they are unfamiliar. Watch Out for Charity Scams! You need to be careful, as scammers out there are pretending to be l… View More

In this short essay, we highlight some of the most important drivers for the economic and investment outlook. The essay is not exhaustive on any subject, nor does it touch on the long list of subjects impacting the investment environment. We will be more comprehensive with our Ten Predictions at year-end. Source: Bob Doll, Crossmark Investments   Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchma… View More

Stocks advanced for a third week in a row (S&P 500 +2.2%). Small stocks (Russell 2000) were up 5.45%. Disinflation optimism and weaker labor data supported peak Fed and soft-landing narratives. Best sectors were real estate (+4.5%) and materials (+3.7%); worst sectors were consumer staples (+0.6%) and energy (+0.9%).   Source: Bob Doll, Crossmark Investments   Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to b… View More

Several weeks ago, we decided to reconstruct the S&P 500 by excluding the Magnificent 7 stocks from the sectors in which they normally reside and by creating a new separate sector for them. The characteristics of the new group of stocks were even more surprising than we might have thought. Looked at in this way as of the end of the third quarter, these seven stocks would represent the Index’s largest “sector” at roughly 28% of the S&P 500, while representing only 17% of its earning… View More

After reaching correction territory on Monday, stocks advanced each day with the S&P 500 (+5.9%) posting its best week in a year. Small stocks (Russell 2000 +7.6%) had their best week in two and a half years. Ten-year Treasury yields dropped 30bp for the week. Soft economic data and a dovish Fed meeting were among the supports. Best sectors were real estate (+8.6%), financials (+7.4%) and consumer discretionary (+7.2%). Laggards included energy (+2.3%), consumer staples (+3.3%), and healthca… View More

The Fed kept rates unchanged at today’s meeting, but whether they are done with rate hikes or simply at a pause is yet to be determined. Today’s Fed statement itself was mostly a copy/paste of September, with some minor wording changes noting that the economy is growing at a “strong” rather than “solid” pace, and employment gains have “moderated” rather than “slowed”. The only new information came with the addition of “financial” conditions to previously noted credit con… View More

Equities were lower again last week as the S&P 500 (-2.5%) fell for the second straight week and finished the week at the lowest levels since April. NASDAQ is now 12% below the recent July peak. Treasuries yields fell on the week, though not before the 10-year yield on Monday rose above 5% for the first time since 2007. The only positive sector for the week was utilities (+1.2%); worst sectors were communication services (-6.3%), and energy (-6.2%). Source: Bob Doll, Crossmark Investments… View More

WHY WE BELIEVE LONG-TERM INTEREST RATES ARE RISING Reversion to the Mean: typical spread between 10-year & inflation is 200 bps Greater Sense Inflation is Structural: Slowing Globalization, Deficit Spending, Environmental Priorities Persistent Deficits 5% of GDP Spooling Effect of Net Interest Expense in the Absence of QE Fed has continued QT After SVB Pause Foreign Demand Weakening by Choice (Saudia Arabia) or Circumstance (China)   REASONS INFLATION LIKELY TO BE STRUCTURAL C… View More