Quarterly Letter Archive
First Quarter 2024
AND… THE PRIZE GOES TO JANET YELLEN
The prize for sparking the equity rally since the October 2023 interim low in the S&P 500 goes to Treasury Secretary Janet Yellen. Her decision to change the Treasury’s quarterly refunding schedule to favor short term bills and limit the supply of longer-term notes short-circuited the then bear market in bond prices.
Fourth Quarter 2023
MIXED MESSAGES
According to famed economist John Kenneth Galbraith, “We have 2 classes of forecasters: Those who don’t know… and those who don’t know they don’t know.” His comments seem particularly apt after negative economic indicators caused many investment professionals to wrongly predict a recession in 2023.
Third Quarter 2023
HIGH INTEREST RATES (FOR LONGER)
The S&P 500 peaked at the end of July, up 19.5% by the 31st. This performance is remarkable given the S&P 500 was up less than 1% on the Friday before Silicon Valley Bank failed in March.
Second Quarter 2023
Trees Don’t Grow to the Sky
The S&P 500 continued its rise in the second quarter with the same sectors leading the charge – technology, communications and consumer discretionary stocks.
First Quarter 2023
AS OF APRIL 5TH, 2023, 10 STOCKS ACCOUNTED FOR 90% OF THE S&P 500 RALLY YEAR TO DATE.
They are Apple, Microsoft, Nvidia, Meta, Tesla, Amazon, Alphabet, Salesforce, AMD, and Broadcom - all technology centric companies.
Fourth Quarter 2022
COVID OR INFLATION… WHICH WILL LAST LONGER?
Although both Covid infections and inflation may have peaked, we doubt either is going away. Inflation trends coupled with the Federal Reserve actions and our elected officials’ political maneuvers will push and pull against each other, leading to another volatile year in 2023.
Third Quarter 2022
The Federal Reserve Has Taken the Punchbowl Away - We Are Worried About a Hangover
We suspect most people think getting inebriated is more fun than sobering up. After the post-pandemic boom times driven by checks in the mail and easy money, we are now dealing with the hangover.
Second Quarter 2022
WHERE WE ARE, WHAT WE THINK AND WHERE WE’RE GOING
Pundits have switched from saying inflation is transitory to saying inflation has peaked. They aren’t addressing the bigger issue – our current inflation is sticky. Here are the reasons why…
First Quarter 2022
WE UNDERSTAND NOT WANTING TO OPEN YOUR STATEMENTS WHEN THE MARKET IS DOWN...
but we don’t want you to stop reading our blogs because they are too dense. For our visual learners, we offer our thoughts on the current market environment in 10 charts! For our auditory learners, we provide our inaugural podcast.
Fourth Quarter 2021
ARE WE THERE YET?
As a child, our family often drove to Florida for family vacations. At some point, my parents thought flying made more sense, and they told my excited sister she was going to love how fast flying would get us there. We boarded the plane, and after sitting in her seat for about 5 minutes, she asked, “Are we there yet?”
Third Quarter 2021
THE FED - AN UNWITTING PARTICIPANT IN THE SQUID GAMES
‘Squid Game’ is a worldwide hit show on Netflix where hundreds of cash-strapped contestants accept an invitation to compete in children’s games for a tempting cash prize, but the stakes are ‘win or die’. As we watched the initial episodes, we couldn’t help thinking the U.S. Federal Reserve might be caught in its own risky game.
Second Quarter 2021
Interest Rate Whiplash
What a difference a quarter makes. In the first quarter of 2021, rising interest rates, expectations of higher economic growth and inflation, and the rally in commodity prices combined to extend the ‘rotation’ from growth stocks into value that began in October of 2020. In the second quarter all that changed, as declining interest rates and a flattening of the yield curve (See blog Why Do We Care About the Shape of the Yield Curve?) led to a reversal of that rotation, and growth stocks, particularly technology stocks, outperformed value. While the market was roiling under the surface, the S&P 500 managed to grind higher, ending the first half up 14.5%.
First Quarter 2021
EMBRACING A CHANGED WORLD
If you happen to be in Marin County, California on a warm night, you might find us debating the consequences of rising debt as a percentage of GDP over a bottle of wine. We realize that others do not always find our economic banter enjoyable, but our backgrounds in economics have proven useful for the times we live in. Our parents are happy to know all the money they spent for those liberal arts educations did have practical applications!
Fourth Quarter 2020
Easing & Excess
Now that the POTUS Twitter handle has changed hands, we no longer lose sleep worried how a late-night tweet will affect our portfolios.
View PDFThird Quarter 2020
Reverse Polish Notation
The current stock market has something in common with reverse Polish notation. For those unfamiliar with financial calculators, reverse Polish notation requires that you input the numbers first and the operation that you want to perform on them second. Initially, it feels counterintuitive and takes some getting used to, but in the end, you get why it works. Although not a perfect analogy, it sounds a bit like current stock valuations.
View PDFSecond Quarter 2020
QE TO INFINITY AND BEYOND - ARE WE THERE YET BUZZ?
Economists, strategists and market pundits heatedly debate the use of quantitative easing (QE) and the way it affects asset prices. With the enormous amount of QE this year ($3 trillion and counting), we are dedicating our second quarter letter to explaining QE and its potential effects on both the economy and portfolios.
View PDFFirst Quarter 2020
THE GLOBAL PANDEMIC
The pain is palpable for the globe, our country, the world’s citizens and risk assets. Never have we felt so truly unsafe.
View PDFFourth Quarter 2019
THE INVINCIBLE S&P 500
Bombs and tweets are flying! BallooningFederal debt, a trade war with China, disruptions in the repo market, impeachment proceedings … no problem. The Federal Reserve has our back. President Trump no longer has unkind words for Fed Chairman Jay Powell, nor should he. With the way the Fed is pumping liquidity into this market, both lowering interest rates and buying Treasury bills, President Trump should give him a medal! Rapidly rising stock prices coincided with the increased liquidity.
View PDFThird Quarter 2019
ARE WE REACHING THE TIPPING POINT?
In the midst of a global slowdown, the U.S.has been the best house in a bad neighborhood. The dominos of negative economic data keep falling, and we're edging closer to the tipping point into a recession. The Fed says the U.S. economy is sound and their two rate cuts are simply due to potential trade war risks that haven’t fully materialized. Can we still achieve a soft landing? Or, will we reach a point of no return where a trade deal will be too late and incapable of reversing the negative economic trends we see?
View PDFSecond Quarter 2019
Expect more volatility ahead with every tweet and news report.
As one of our favorite strategist’s said, “Investors continue to be beholden to the actions of three people –Powell, Trump, and Xi. Chair Powell is unelected, President Trump is unpredictable, and President Xi is largely unaccountable.”
View PDFFirst Quarter 2019
TALE OF TWO MARKETS
Eighty-nine percent of assets handed investors losses in 2018, more than any year since 1901. The correlation of asset types continues in 2019, but in the opposite direction.
View PDFFourth Quarter 2018
What have the markets been telling us?
And what do we expect for 2019?
The storm clouds we saw gathering at the end of the 3rd quarter pelted us with rain, and we don’t see beautiful clear skies ahead. Increased volatility is here to stay, with very few places to hide.
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2x Wealth Group is a team at Ingalls & Snyder, LLC., 1325 Avenue of the Americas, New York, NY 10019-6066. (212) 269-7757
