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Good day everyone.
00:00:01:09 – 00:00:05:08
My name is Brian Andrew, Merit Financial
Advisors’ Chief Investment Officer.
00:00:05:15 – 00:00:07:10
It’s been about a month
since we last spoke,
00:00:07:10 – 00:00:08:27
and I’d like to provide you an update
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on what’s happening with markets
and the economy.
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The economic and inflation data we’ve
received continues to send mixed messages.
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Let’s go over what’s happened
since the last time we provided an update
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and make some sense of the data
and what’s happened in markets.
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The stock market has continued to rally.
00:00:25:11 – 00:00:29:13
In the last four weeks,
we’ve seen the S&P 500 index move higher
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by almost 4%, and it’s up over 14%
since the beginning of the year.
00:00:34:07 – 00:00:37:07
Much of this return,
though comes from just a few stocks.
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More on that in a minute.
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Bond yields have moved up and down
in a narrow range during the last several
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weeks, as investors try to sort out
when we might see some relief
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in the form of lower
interest rates from the Federal Reserve.
00:00:49:28 – 00:00:53:07
Some economic data points have us
feeling like things are picking up,
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while others are a cause for concern.
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Let’s try to discern the difference
between the two.
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Pundits have been looking for a recession
for almost two years now.
00:01:02:16 – 00:01:06:10
Yet we have seen a real economic
growth rate averaging over 2%
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for the last eight quarters.
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This seems to be the Goldilocks level
where the economy can run,
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keeping employment growth up
while not creating too much inflation.
00:01:16:03 – 00:01:19:13
Though inflation has been a real problem,
it’s getting better.
00:01:19:23 – 00:01:23:10
The inflation we experienced was primarily
a function of two things
00:01:23:19 – 00:01:27:03
the post-pandemic sugar high
coming from government and Federal Reserve
00:01:27:03 – 00:01:30:03
stimulus,
which increased demand in some sectors,
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and the supply chain shocks
due to the world’s rolling reopen.
00:01:34:21 – 00:01:38:05
There are also some signs of weakness
in the economic and inflation data.
00:01:38:13 – 00:01:41:24
The recent report on May
consumer prices was positive
00:01:42:02 – 00:01:44:14
because it showed tepid price growth.
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There were pockets of outsize inflation,
though hotdog prices were up 7.3%
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and tickets to sporting events up 21.
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These are the prices that cause consumers
concern
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and politicians
running for reelection problems.
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Investors have swung from optimistic
about future growth
00:02:02:02 – 00:02:05:02
and lower inflation
to being concerned about both.
00:02:05:02 – 00:02:09:17
As we look through the rest of 2024,
we think we can expect more of the same.
00:02:10:04 – 00:02:13:01
Investors are focused on
the level of interest rates
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and the future of the Fed Reserve’s
interest rate policy.
00:02:16:29 – 00:02:19:28
Because the economy has performed
better than most expected,
00:02:20:06 – 00:02:23:20
the interest rate cuts from the Fed
have been postponed.
00:02:24:07 – 00:02:28:18
This means economic bad news
has been good news for investors.
00:02:28:27 – 00:02:33:16
Markets anticipate that economic weakness
could lead to reducing interest rates.
00:02:33:27 – 00:02:38:07
For example, the release of this most
recent CPI report put an interest rate
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cut back in the futures market
for the fourth quarter of this year.
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For now, interest rates
remain at the heart of asset prices.
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Looking at the movement of the yield
on a ten-year Treasury
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and the S&P 500 over the last six months,
you’ll find a very high correlation.
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When economic data has shown
weakness, expectations for inflation
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fall, and investors look for evidence
that the Fed will begin to cut rates.
00:03:02:24 – 00:03:07:19
Lower interest rates can mean price
appreciation for bonds and potentially
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a better discount rate for corporate
earnings, which raises stock prices.
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Looking out over the next six months,
we expect this environment to continue.
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The economy may continue to show a mixed
bag of data, pushing interest rates around
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in the same trading range they’ve been in
since the beginning of the year.
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Of course, any outlook must consider the
geopolitical environment we’re living in.
00:03:30:04 – 00:03:33:14
2024 is an unusual year,
and that over half of the world’s
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population will vote in a general election
for leadership.
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This has the potential to change
government fiscal policy
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and create market uncertainties
impacting asset prices.
00:03:44:17 – 00:03:47:26
In the last month,
we’ve seen elections in India, Europe
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and Mexico
disrupt stock prices on a near term basis.
00:03:52:03 – 00:03:53:23
India presents a good example.
00:03:53:23 – 00:03:56:29
The current Prime Minister, Modi
and his party were thought
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to retain their support
and perhaps even find more strength.
00:04:00:17 – 00:04:04:05
Instead, the election delivered a surprise
with them losing seats.
00:04:04:14 – 00:04:09:18
Their stock market weakened, interest
rates rose and the currency was devalued.
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Because these events are hard to predict,
we run portfolios through a scenario
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analysis looking at different potential
outcomes, their impact on prices,
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and then determine how to weight
those probable outcomes over time.
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This approach helps us manage
risk and provides insights to advisor’s
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clients as to how to understand the care
and planning and investing approach
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during uncertain times.
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Don’t forget to follow Merit
on social media to be the first
00:04:36:19 – 00:04:40:06
to hear exciting company news
and our latest market updates.
00:04:40:14 – 00:04:43:01
Please reach out to your Merit
financial advisor
00:04:43:01 – 00:04:45:21
if you have any questions,
and I’ll see you next time.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
00:00:00:13 – 00:00:01:09
Good day everyone.
00:00:01:09 – 00:00:05:08
My name is Brian Andrew, Merit Financial
Advisors’ Chief Investment Officer.
00:00:05:15 – 00:00:07:10
It’s been about a month
since we last spoke,
This is the heading
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- elit tellus, luctus nec
- elit tellus, luctus nec
- elit tellus, luctus nec
ullamcorper mattis, pulvinar dapibus leo.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
00:00:00:13 – 00:00:01:09
Good day everyone.
00:00:01:09 – 00:00:05:08
My name is Brian Andrew, Merit Financial
Advisors’ Chief Investment Officer.
00:00:05:15 – 00:00:07:10
It’s been about a month
since we last spoke,
This is the heading
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.