Spring 2024 Market Perspectives with Brett Carleton
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As we come to the end of the first quarter of 2024, we would like to wish you a happy Easter, along with the renewal of Spring. Speaking of new growth, U.S. equity markets are back at all-time highs driven by the continued excitement around Artificial Intelligence (AI) along with the hope that interest rates have seen their peak. The catalyst behind the rapid rise in the stock prices of the leading AI companies is their rapid growth in revenue. Nvidia, a leader in AI chip technology, has seen its revenue grow 125% this past year. While this handful of AI companies have captured all the media attention, the real story has been the resiliency of U.S. Corporate earnings. U.S. companies continue to report near-record profits and growth despite the rising interest rates and inflation we have experienced over the past two years.
If we want to talk about resiliency, the U.S. consumer continues to spend despite rising prices and higher interest rates. During the pandemic, Americans were forced to cut-back on spending, thus building up record amounts of savings. It is estimated that Americans have more than $10 trillion (about $31,000 per person) in bank savings and money market accounts, and with employment back above pre-pandemic levels, consumers continue to spend. Housing is even beginning to show signs of recovery now that interest rates have leveled off. If the Federal Reserve were to begin lowering interest rates later this year, that could be a real stimulus for the housing market. Housing is an important leading economic indicator because with the purchase of a new home, people tend to buy furnishings, appliances, window coverings, etc. Additionally, we are facing a significant housing shortage in this country, so this will be an important statistic to watch not just this year, but for years to come.
This past quarter I finished reading the book “Same as Ever” by Morgan Housel. The reason I share this with you is, it is one of the best books I have read in the past several years. In the fast-paced, ever-changing world we live in, he discusses the things that do not change over time. like human behavior. For example, people will always be motivated by greed and fear, and they will always be susceptible to persuasion. His advice is to “Invest in preparedness, not prediction,” and “to save like a pessimist and invest like an optimist.” This is the process we go through with you, making sure your “savings” grow over time, but planning for those events that were not forecasted (i.e., a Russian attack on Ukraine, the October 7th attack on Israel, a cargo ship taking out a bridge in one of the largest U.S. ports). Unexpected events often have the most significant impact.
The first quarter has seen several changes internally at Heritage with the retirement of Denise Kapke, and the addition of Nathan Burleson and Robert Dwyer. Nathan has taken on the role of customer care specialist and will be helping with account applications and changes, distributions, additions, and transfers. We have also added several innovative technologies that will require more of Robert Rizzari’s time as he moves into more of an operations role. The addition of Robert Dwyer as a Senior Wealth Advisor has allowed us to make these changes and gives us capacity for growth. I often get asked if we are accepting new clients; these changes will allow us to serve more families. If you have a friend, family member, or colleague that is asking you questions about finances, let us know if you would like to make an introduction. We can discuss the best way to do that.
If you have any comments or questions, feel free to give us a call.
Brett S Carleton, CFP, ChFC