Mr. Musk Goes to Washington
Some thoughts in no particular order of importance.
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Mr. Musk Goes to Washington?– Love him or hate him, Elon has now cut billions in spending in Washington. While I realize there are passionate debates on either side of this, please know that my biggest financial fear has been the pending and, in my opinion, certainty of US default due to our annual deficits and debt. If you think folks are upset now, imagine when Social Security checks stopped coming. Washington’s newfound fiscal responsibility is improving our country’s balance sheet considerably and quickly. This course of action has been so fascinating for me to watch and observe and I suspect there are many more acts to follow.
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Inflation’s Mixed Signals – This week’s Consumer Price Index (CPI) was hotter than expected suggesting inflation is far from over (1). Markets began the day significantly lower however as investors took a deep dive into the print realizing that the number was bolstered by? rents, which typically lag considerably, and egg prices, which have recently shot up due to Bird Flu, stocks were gobbled up quickly and losses recovered. Thursday’s Producer Price Index (PPI) excluding food and energy, was in-line with expectations and further quelled fears leading to additional stock and bond gains (2).
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In my opinion inflation is going to have lots of fits and starts especially while we grapple with pending tariffs, deportations and other economic challenges throughout this year.
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Big Cap Tech Fading – With the exception of META, the big-cap technology names that have led markets for the last few years are slowly moving out of favor. Year to date NVIDIA is up just over 3%(3)? while Microsoft is down over 3%(4)? and Apple is down 2.32%(5). Despite these moves, the S&P 500 is now up 4% (6) for the year suggesting that other areas are finally picking up the slack. I like this and it is precisely why we remain quite diversified and sought to reduce our exposure to these big cap technology names as 2024 came to a close. Ironically the China index as tracked by the iShares China ETF (FXI) is up over 12% YTD, helping all emerging market exposure as well (7).
Until next time
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~ Quint Tatro
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Footnotes:
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