Stableford Capital Insights

Stableford Market Commentary December 2023

Bulls on the loose!

Bull on the NJ traintracks

December was so bullish there was a steer running the train tracks in Newark, NJ! Thank goodness he stayed off the third rail! Once the B.S. settled down and commuters made it home for a long winter’s nap, equities managed a 4.4% gain for December.

Exhibit 1—Equities Up 4.4% in December

Meanwhile, the U.S. 10-year Treasury yield fell a whopping 45 basis points as bond prices surged.

Exhibit 2—Bond Yields Drop 45 Basis Points in December to 3.9%

To what can we ascribe these large moves? Saint Nick, elves, and a reindeer with a glowing proboscis? No, it is the Fed pivoting. The December FOMC meeting marked the first time in nearly two years that Powell didn’t try to talk up rates. In fact, he was downright dovish. This drove rates down hard and equities up as markets celebrated the slaying of the inflation dragon. All is well, and we can see the runway for the soft landing, right?

Perhaps, as long as the mechanics from Boeing remembered to bolt the hatch. Aviation jokes aside, a soft landing is certainly plausible. But with equities expensive at approximately 20x 2024 earnings, and the ten-year sub 4%, there is a lot of good news baked in. We’ll need some more growth in the economy to move equities up substantially.

The risk of a downturn is real too. Federal spending was substantial in 2023, particularly late in the year. Job growth has largely centered around government and healthcare, not cyclical sectors that might indicate a path to future growth.

That said, 2023 had many surprises for forecasters. Perhaps 2024 will provide more of the same. Much will depend on the path of earnings given the high valuations at the start of the year.

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This market commentary was written and produced by Stableford Capital, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

S&P 500 INDEX: The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Justin Thomas
Justin C. Thomas has worked for over 15 years as a portfolio manager and analyst managing institutional assets for hedge funds and large financial institutions. Career highlights include 8 years as an equity analyst and portfolio manager at PartnerRe Asset Management, a global reinsurance company with $17 billion in assets under management, and prior to that managing a long-short equity portfolio for Citigroup’s proprietary account. Justin has also worked as an analyst at long-short hedge funds and in research for Montgomery Securities (Bank of America Securities). In addition, Justin Thomas gained operational experience while working in finance and operations at E-Stamp, a start-up in Silicon Valley. He began his career working as a CPA at KPMG. Justin has an MBA and Masters in Accounting from Northeastern University and an undergraduate degree in Economics from Tufts University.