The US economy remains solid and there is a growing enthusiasm for the potential of Trump’s fiscal policies. While positive on the prospects of technology companies, we anticipate that economic fundamentals and valuations may favor underappreciated investments in smaller capitalization stocks along with value-oriented sectors and companies.

Will America be able to say in four years that we are better off than we are today? To do so, President-elect Trump must implement his economic agenda effectively, and that agenda must deliver tangible results. Given a myriad of challenges, it remains uncertain how smoothly implementation will proceed.

Today, the economy is cooling yet a recession seems to be a low likelihood event.  Slowing but solid economic growth, falling inflation and interest rates seem to be leading us to a goldilocks economy which will continue to delight investors.

2Q24 was driven by AI euphoria and strong corporate earnings. US stocks led, with the biggest technology stocks especially strong. The big question for investors going forward is are they too late to the AI party or will this trend of concentrated returns, largely driven by technology, continue?

Productivity enhancements, led by AI, may be the key variable in equity price appreciation going forward. Margin benefit from AI driven activity should broaden out across the corporate sector and be reflected in the stock price appreciation across an increasing number of companies.

We take a look at the market impact of historical elections as well as what we can expect from the current election. Spoiler alert, expect somewhat higher volatility but the U.S. economy will continue to be the global innovation engine providing a solid foundation for the stock market.

Despite a steady drumbeat of negativity, 2023 proved to be an extraordinarily good time for markets in the United States. In hindsight, falling inflation, strong economic growth and improving earnings are a recipe for outsized equity market performance,

Higher tax rates, increased regulations, greater government intrusion and an industrial policy are not the ingredients for faster economic growth, in our opinion. We look for 2024 real GDP growth rate to be lower than 2023, more likely in the 1.5% to 2% range.

The Democrat’s claim that bad messaging is to blame for Biden’s low approval rating. But Bidenomics as economic policy could be the real issue. Ignoring the substitution effect of tax increases will further increase the federal deficit and debt.

Yes, Trump pursued some of Reagan’s conservative policies…However, the two leading presidential candidates economic policies are similar in other ways, especially in favoring special interest groups, and will make America worse off.

The “debt ceiling” deal of May has been extraordinary leaving the U.S. with a $1 trillion deficit and a growing US Treasury issuance calendar which has global bond investors repricing what the “normalized” cost of interest should be for the U.S.  

On the back of terrible market performance in 2022, investors started the year fixated on inflation, Fed policy and a potential recession. Of 20 Wall Street investment strategists, only 2 had bullish forecasts going into 2023 implying low odds for any market rally…

The Volcker rule was a mechanistic approach to monetary policy. Bernanke deviated from this policy and the Fed’s balance sheet continued to grow. Victor takes a look back at the past decade and how the Fed has lost its way…

Based on lagged impact of M2, inflation should decline to 2% by the November ’24 election. We expect T-bill yields to stabilize and the economy to return to trendline growth with higher bond yields and a normalized yield curve.

It goes without saying that 2022 was a difficult investing year and the list of items to worry about seemed never ending.  The biggest worries on the list were inflation, Fed...