by Franklin J. Parker, CFA
The Summary
This week is a fairly light data week, which is a releif after last week’s torrent. The Federal Reserve met last week and kept interest rates steady, with little guidance on when rate cuts might come (markets are betting on a May – June timeframe).
Earnings season continues, and it seems that Q4 of 2023 will be the 4th quarter out of 5 where companies make less money than they did the year before. While the headlines look good, the market rally over the last month or so has been mostly driven by the top 8 – 10 tech stocks while most other companies are struggling to grow.
Employment posted better than expected, and it continues to be the bright spot in the economy. In January, employers added 317,000 jobs, which is more than double the 155,000 that were expected.
My view, however, is that we are still in a pre-recessionary environment and that caution is warranted. All that said, your goals will always define how we manage this information in your portfolio.
Chart of the Week
Looking at the recent GDP figures for the last quarter of 2023, we can see that it is still the consumer that is keeping the US economy afloat. So long as people keep spending like they have been, it is likely that the economy will limp along. Seeing layoffs, however, and the unemployment rate rising (or the state of consumer credit — a datapoint we get this week), would likely be the last domino to fall before a recession (if we do indeed get one).
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