Market Recap – April 12, 2024

Summary:

  • Weekly Returns (Friday Open – Thursday Close) & YTD Returns*: [1]

The CPI report highlighted enduring price pressures, delaying expectations for interest rate cuts. This has negatively affected the bond market and interest rate-sensitive stocks. Conversely, tech stocks, led by Apple’s new AI-integrated chip unveiling, rallied, injecting optimism into the sector.

  • CPI Report: The latest Consumer Price Index (CPI) data revealed a year-over-year increase of 3.5% (4% month-over-month), slightly above the anticipated 3.4%. Core CPI, which excludes food and energy prices, also exceeded expectations, registering a 3.8% increase year-over-year (0.4% month-over-month), against a forecast of 3.7%. Delving into the details, food prices rose by 2.2% year-over-year, while energy prices saw a 2.1% increase year-over-year (1.1% month-over-month). [2]
  • Apple Unveils Advanced Chips: Apple unveiled they are nearing production on M4 chips, marking a significant advancement in personal computing. This leap allows for a denser, more efficient chip architecture, enhancing both speed and efficiency across Macs. The CPU and Neural Engine also see substantial boosts in speed, enhancing overall system performance and machine learning capabilities. Apple’s innovation continues to redefine the Mac experience with these chips, promising a blend of high performance, efficiency, and the potential for groundbreaking applications in graphics and AI. [3]
  • Iran-Israel: Israel is on high alert for a potential direct attack by Iran, a retaliation for an Israeli strike that killed seven Iranian military officers in Syria nearly two weeks ago. U.S. officials anticipate the attack could involve over 100 drones and dozens of missiles targeting military sites within Israel, possibly executed by Iranian forces and regional proxies.  This significant threat raises concerns about escalating tensions into a broader regional conflict.   Amid these developments, the U.S. State Department has cautioned Americans in Israel to limit travel and stay within major cities, better protected by the Iron Dome missile defense system. [4]

Chart of the Week:

Economic Outlook:

  • Unemployment: We assign a greater than 60% probability of the unemployment rate ending 2024 at over the Fed’s 4.0% target due to an increase in layoffs as heavily indebted firms struggle to refinance their debt at higher interest rates. [5]
  • Consumers: Our analysis indicates that consumer demand is expected to remain strong, contingent upon the unemployment rate maintaining a level below 4%. Nevertheless, we maintain a cautious stance regarding the potential for consumers to overextend themselves financially through excessive use of credit.
  • Credit Markets: We have reduced credit exposure in the portfolios as credit spreads are at historic lows despite large amounts of corporate refinancing in the next 12 at higher interest rates. [6]

*US Small Cap Stocks is Russell 2000

* US Bond Market is Bloomberg Aggregate

*International Stocks is MSCI ACWI ex-US Index

*Weekly Returns is April 5th, 2024-April 11th, 2024

*YTD is Jan 2nd, 2024-April 11th, 2024

By: Nick Colletta, CFA, CAIA

Sources:

  1. https://www.morningstar.com/
  2. CPI Home : U.S. Bureau of Labor Statistics (bls.gov)
  3. https://www.theverge.com/2024/4/11/24127529/apple-upgrade-macs-m4-chip-ai
  4. S. issues travel warning for Israel with Iran attack believed to be imminent and fear Gaza war could spread – CBS News
  5. Businesses continue to struggle with high prices and interest rates | Federal Reserve Bank of Minneapolis (minneapolisfed.org)
  6. ICE BofA US Corporate Index Option-Adjusted Spread (BAMLC0A0CM) | FRED | St. Louis Fed (stlouisfed.org)

Bridge Advisory LLC Disclosures

Bridge Advisory, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Investment Advisory Services offered through Bridge Advisory, LLC. Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type. Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Information herein has been obtained from sources believed to be reliable, but Bridge Advisory, LLC. does not warrant its completeness or accuracy; opinions and estimates constitute our judgment as of this date and are subject to change without notice. This newsletter expresses the views of the authors as of the date indicated and such views are subject to change without notice.

Print Friendly, PDF & Email
No Comments

Post A Comment