“You deal with reliable people and you do what you’re supposed to do. And all these simple rules work so well to make your life better. And they’re so trite.”
How old were you when you figured out these simple rules?
“About seven.” - Charlie Munger (97 years old), Berkshire Hathaway Vice Chairman in a recent CNBC Interview
Last week's market recap:
- The S&P 500 closed the week up 1.71%. Year-to-date the index is up 9.91%
- NASDAQ closed the week up 3.08%. YTD the index is up 21.37%
- U.S. Aggregate Bond index was down -1.37% for the week. YTD the index is up 1.88%
- 10-Year Treasury Rate increased, ending the week at 3.70% up from 3.46% the prior week.
- Fed Funds Target rate is currently 5.00-5.25%
- The 1-Year Treasury is yielding 5.08%
- A 6 Month Treasury is yielding 5.33%
The week ahead:
- PCE Inflation – The Fed’s preferred inflation gauge
- Housing Market Updates
- Earnings: Lowes, Costco, Nvidia (How many times will they mention A.I.?), TD bank, etc.
Last week U.S. Recession risks were lowered as core retail sales and industrial production for April both came in stronger than expected. Early in the week, we had positive headlines regarding the Debt Ceiling debate, and stocks looked to be pricing in a soft landing. Credit remains volatile, but Fixed Income seem more attractive than previous years as Fixed Income yields are higher.
Broadly speaking, Year-to-date gains in equity markets have been driven by multiple growth mostly due to rate cut expectations. The A.I. story is partially responsible for the multiple expansion in mega-cap tech. Going forward, future gains may need to depend higher earnings, especially if the Fed keeps rates higher for longer than expected. Earnings matter! It’s so “trite.”
As always, let us know if you have any questions.
CRA Investment Committee
Matt Reynolds CPA, CFP®
Tom Reynolds, CPA
Robert T. Martin, CFA, CFP®
Gordon Shearer Jr., CFP®
Jeff Hilliard, CFP®, CRPC®
Joe McCaffrey, CFP®
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