Monthly Market Roll - Economic and Market Update for 2024

Presenters:

• Brad Ry: Partner, Senior Director of Portfolio Management at Waverly.
• John Cox: Chief Investment Officer of Public Markets.

Key Takeaways

Economic Overview

• GDP Growth:
  • Q1: 1.5%
  • Q2: ~2%
• Job Growth: Strong but slightly tapered off.
• Unemployment: Increased from 3.4% to slightly above 4%.
• Inflation: Moderating over the last few months.

Market Performance

• Global Equities: Up 10-11% for the year.
• Bonds: Generally flat, but potential for a good second half.
• S&P 500: Up 15%, outperforming other asset classes.
• Technology Sector: Dominating the market narrative.

Central Bank Dislocation

• Different policies from the FED, European Central Bank, Bank of England, Bank of China, and Bank of Japan.
• Impact on asset class performance and market dislocation.

International Markets

• US Dollar: Strong, influenced by best growth stats.
• International Equities: Better valuations outside the US but less favorable earnings growth.
• Potential for rate cuts by the FED (75% chance in September, and another cut projected in December).
• Possible impact on the dollar and international investments.

Portfolio Strategy

• Diversification: Important to maintain a balanced portfolio and not overstretch towards any single asset class.
• Fixed Income: Increased opportunities; interesting market for treasuries, corporate bonds, private credit, and other fixed income securities.

Cash is King

• High interest rates for cash and money markets (~5% annualized).
• Investing in cash equivalents with various options: money markets, T-bills, etc.
• Importance of matching investment types with time horizons (short vs. long term).

Market Outlook

• Historical Perspective: Similar returns in different years—volatility is normal.
• Short-term vs. Long-term: Cautiously optimistic for the short term; sustained optimism for the long term (3-5 years).
• Factors Affecting Markets: Continuous monitoring required, be aware of election impact, corporate earnings, and FED policies.

Conclusion

• Stay invested but be mindful of risk factors.
• Opportunities in fixed income are notable.
• For personalized advice, consult with Waverly Advisors.
• Visit WaverlyAdvisors.com for more information.

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