Week and Year Ending 12/29/2023


2023 went into the financial history books at the Friday close, with blockbuster gains for the year. The S&P 500 finished with a total return of 26.72%, foreign markets were +15.10%, and bonds were +5.04%. The US dollar declined by 2.04% and oil fell by 10.73%. Bitcoin was up by 156% as of midday on December 31st.

No one expected this; the Fed continued to raise interest rates, and the consensus was that a recession was coming. The war between Ukraine and Russia continued, and a new one broke out between Israel and Hamas. There was a banking crisis in the first half of the year, but none of that stopped the market (although there were some pullbacks during the year).

The excitement generated by artificial intelligence, falling inflation, the belief that the Fed is done hiking and that interest rate declines would be on the way in 2024,  earnings that held in there, and a strong consumer and labor market were all enough to keep the market climbing a wall of worry to dramatic gains. Even Taylor Swift helped; her record-breaking tour was like a mini-Super Bowl in every city she traveled to during the year.

As it ends, the S&P 500 closed the year at 4,769.83, just off of the all-time high set almost two years ago, on January 3, 2022, at 4,796.56. So right now the market shows a double-top. The last time the market was at this level, it didn’t work well.

The yield on the 10-year treasury started and ended at about the same place, 3.88% to close the year versus 3.83% at the end of 2022, but it was a wild ride in between. The yield fell as low as 3.30% in April and then climbed all the way to 4.98% in October before falling back to 3.88%. When interest rates began to spike, several banks failed, including Silicon Valley Bank and First Republic Bank. These banks got caught short-handed by owing a portfolio that was heavy in long-dated bonds, which were purchased when interest rates were much lower, resulting in huge mark-to-market losses. The Fed ended the crisis by saying they wouldn’t let depositors lose money, even if it was above the FDIC limits, ending potential bank runs.

The big spike for the year in yields, which did hold, were short-term treasuries due to the Fed raising interest rates. The 3-month yield started at 4.45% and ended at 5.40%. It peaked at 5.63% in October. After years where interest rates were essentially zero, the high rates sent a tidal wave of cash into money market funds.

The consensus going into 2024, is that stocks will return 7-10%, Many still expect a recession, albeit a soft one. But as we know and especially learned in 2023, the consensus is often wrong.

Here is to a Happy New Year to everyone!




Week Ending 12/15/2023


  • US markets made it seven weeks in row, up by 2.82%, bonds were up by 2.15% as interest rates continued to fall. The yield on the 10-year dropped by 32 basis points.
  • Mortgage rates fell to under 7% for the first time since August of 2022.
  • The Fed kept interest rates unchanged, but to everyone’s surprise, Powell sounded dovish and said that rate cuts were under discussion, contrary to a statement just 12 days before. The markets took off in response; not sure why Powell needed to go that far; hope this won’t be a replay of the 1970s when the Fed took its foot off the gas and inflation accelerated. Or maybe he sees a steeper economic decline than investors anticipate down the road and wants to get in front of it.
  • CPI was up by 3.1% year over year.  Services, excluding energy, were up by 5.1%.


Week Ending 12/8/2023


  • US stocks +0.30%, international stocks -0.62%, bonds +0.06%.
  • S&P 500 has a six-week winning streak.
  • Investors think there will be a soft landing, and interest rates have peaked.
  • Earnings estimates for 2024 have been up in the last few weeks.



November 2023 Recap

November 2023: Financial Markets Ride a Rebound Rollercoaster

November 2023 painted a rollercoaster picture for financial markets, offering a welcome glimpse of sunshine amidst lingering anxieties. Here’s a breakdown of the key themes:

Equity Market Uptick:

  • Major indices soared, defying some bearish forecasts and ending the month on a high note.
  • The S&P 500 jumped 9.1%, marking its best monthly return since January 2023. The Dow Jones surged 9.2%, and the Nasdaq Composite skyrocketed 10.8%.
  • Small-cap and mid-cap stocks outperformed large-cap, indicating a broader market rally.

Shifting Sentiment:

  • Several factors contributed to the turnaround:
    • Disinflationary trends: Lower-than-expected inflation data fueled hopes for peak inflation and a potential slowdown in Fed rate hikes.
    • Positive earnings surprises: Strong earnings reports from major companies, particularly in technology and consumer discretionary sectors, boosted investor confidence.
    • Easing Fed rhetoric: Hints at a slower pace of future rate hikes from the Federal Reserve further calmed anxieties.

Sector Rotation and Winners:

  • Growth stocks, previously battered by rising rates, led the charge with impressive gains. Technology, consumer discretionary, and real estate sectors soared.
  • Defensive sectors like utilities and consumer staples, which had held up during the downturn, saw modest gains or even slight declines.
  • Energy was the month’s sole negative sector, impacted by concerns about slowing global demand and potential recessionary scenarios.

Global Markets Join the Party:

  • International markets enjoyed a strong rebound as well.
  • Developed markets like the MSCI EAFE rose 9.3%, while emerging markets posted an 8.0% gain.
  • This reflected the improvement in global risk sentiment and the weakening of the US dollar.

Other Notable Events:

  • The US-China relationship saw signs of potential thaw with a resumption of high-level military communication.
  • The temporary ceasefire in the Middle East allowed for the exchange of hostages, offering a glimmer of hope in a volatile region.
  • Concerns about a US debt default eased with the temporary suspension of the debt ceiling crisis.

Overall, November 2023 was a month of remarkable financial market resilience. The fading threat of inflation, cautious optimism regarding Fed policy, and strong corporate earnings combined to fuel a broad-based rally. However, some underlying uncertainties remain, including the trajectory of economic growth, geopolitical tensions, and the future pace of interest rate hikes.