MARKET RECAP

• US stocks rally by 2.67%, international stocks +2.50%, bonds -0.05%.
• The first estimate for GDP for Q1 2024 came in at 1.6%, below the expectations of 2.4% and down from 3.4% in Q4.
• Google had a big week, up 11.59%,
• Core PCE was 2.8% year over year and up 0.3% for the month.
• The 10-year treasury closed the week yielding 4.67%, just off its 5-month high, hit earlier in the week, of 4.696%.
• The US has been outperforming the rest of the world economically, but we have been running deficits at twice the average in Europe. So much of the growth is due to this fiscal stimulus and out-of-control deficits that neither party has the guts to deal with. The US accounts for 26.3% of world GDP, the highest in 20 years.
• However, other factors that are probably helping are immigration, although mostly illegal, which still positively seeps into the economy, the growth in AI, and higher labor productivity. Labor productivity increased by 3.3% in Q4 of 2023.

US STOCK MARKET – 5 YEAR WEEKLY CHART OF VTI

SCOREBOARD

MARKET RECAP

• US stocks -1.63%, international -2.03%, bonds -0.74%.
• Markets have been down for two straight weeks. Inflation continued to be higher than expected. Core services were up 5.4%. Consumer inflation expectations are rising, according to a University of Michigan survey.
• Investors expected six to seven rate cuts at the beginning of the year, but they are now down to one to two and maybe zero.
• The yield on the 10-year treasury is now 4.50% and is trending higher; see chart below.
• Bank stocks took a hit. JP Morgan has been on fire (in a good way) all year, fell by 6.5%, as high interest rates are beginning to cut into profits.
• The Philadelphia Fed reports that 3.5% of credit card balances are over 30 days past due, the highest delinquency rate since the data was recorded in 2012.
• International tensions are way up; investors were bracing for an Iranian attack on Israel, and it happened over the weekend. Israel did an exceptional job repelling the attacks.

CHART OF 10-YEAR TREASURY YIELD

SCOREBOARD

MARKET RECAP

• US stocks -1.05%, international -0.48%, bonds -0.99%, bitcoin -3.1%.
• US payrolls increased by 303,000, much greater than the 200k estimate. Unemployment fell to 3.8%, wages rose, and the workforce participation rate increased.
• Fed official Neel Kashkari suggests that no rate cuts may be necessary in 2024, returning to the viewpoint we suggested two weeks ago.
• The ISM for manufacturing shows an expanding economy for the first time since the fall of 2022, up to 50.3 in March from 47.8 in February; economists expected 48.1.
• New factory orders were up 1.4% in March versus 1% in February.

SCOREBOARD