Economic Update 4-01-2024

• On a week shortened by the Good Friday holiday, economic data included the final U.S. GDP growth number for the 4^thquarter being revised slightly higher. Recent monthly data included gains in durable goods orders, and mixed house price and home sales data, as well as mixed results in consumer confidence.
• Equities fared positively around the world last week, with some economic improvements abroad and continued hopes for rate cuts mid-year. Bonds fared decently with a small decline in yields. Commodities saw gains, primarily in crude oil and gold.

U.S. stocks continued their run of positive weeks, with the S&P 500 again reaching record highs. However, breadth has improved, with outperformance from the equal-weight version of the index and small caps outperforming mega-caps. Value and more defensive parts of the market led, with the largest gains spread between utilities, energy, financials, and healthcare—all near or over 2%. Technology was one of only two sectors with negative returns for the week, down over a percent. Real estate saw gains of over 2% for the week as well.

There appeared to be some negative impact early in the week by Tuesday’s collapse of the Francis Scott Key Bridge in Baltimore, due to the potential negative effects on one of the busiest U.S. ports (particularly for autos), and secondary potential upward impacts on near-term inflation.

Foreign stocks gained as well, with Europe, U.K., and emerging markets all outperforming the U.S., while Japan lagged. It was noted that the U.K. officially moved into recession in Q4, upon a growth contraction of -0.3%. conditions elsewhere, though, such as in Germany and Spain, have improved a bit. Sentiment has also ticked higher—in fact the European Commissions’ confidence gauge is now the highest it’s been in two years. Emerging markets saw gains across the board. The Japanese yen has continued to weaken (to the lowest levels in over 30 years, in fact), despite recent small interest rate hikes, which would normally provide some support. It appears a continued dovish stance on ‘easy policy’ is the culprit, implying markets don’t believe conditions will tighten significantly further.

Bonds saw minor gains as interest rates ticked down just slightly across the curve, with U.S. Treasuries and corporate credit providing similar returns. Foreign bonds were held back a bit by a stronger dollar.

Commodities gained almost across the board last week, led by precious metals and energy, while industrial metals were little changed. Crude oil rose 3% last week to $83/barrel. Ukraine has been intensifying its drone strikes on Russian refinery facilities, which reduces crude oil demand a bit, a downward influence, but has a more meaningful impact on negatively impacting supply of distillates (jet fuel, diesel, etc.), driving those prices potentially higher. Weaker U.S. drilling activity has also raised inventory concerns. A little-followed area of the commodities world (being only 0.3% of the S&P GSCI index), cocoa, has seen a spot price rise of over 130% year-to-date due to extremely weak harvests and crop disease in key African growing nations Ghana and Ivory Coast, which has led to shortages. Ironically, reports of illegal mining (in response to now higher prices for gold) have negatively impacted key growing areas.

Period ending 3/29/2024	1 Week %	YTD %
DJIA	0.84	6.14
S&P 500	0.40	10.56
NASDAQ	-0.29	9.31
Russell 2000	2.60	5.18
MSCI-EAFE	0.13	5.78
MSCI-EM	0.45	2.37
Bloomberg U.S. Aggregate	0.23	-0.78

U.S. Treasury Yields	3 Mo.	2 Yr.	5 Yr.	10 Yr.	30 Yr.
12/31/2023	5.40	4.23	3.84	3.88	4.03
3/22/2024	5.46	4.59	4.20	4.22	4.39
3/29/2024	5.46	4.59	4.21	4.20	4.34

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.                                                                                

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.