Q4 2023 earnings are starting to hit the tape. From mine, if the market is to continue rallying – it’s less about inflation and the Fed – it’s whether corporate America will deliver on 12% earnings growth in 2024. Coming into earning’s season – my view 12% felt ambitious – given the slowing economy and relative health of the consumer. This post talks more to the concentration in the market – the relative influence from NVDA – and why diversification will be key this year.
Equal Weight ETF to see Mean Reversion
The euphoria in markets continued last week – with the S&P 500 notching a new record high – taking out the 4817 high from Jan 2022. Thanks largely to the Fed signaling peak rates in combination with inflation trending lower – markets now believe a ‘soft landing’ is possible. That is, inflation ultimately trends back to the Fed’s objective (2.0%) without any negative impact to the broader economy (e.g. widespread job losses). We will see how that turns out – as the Fed is attempting to thread a narrow needle. From mine, a soft landing remains a lower probability outcome. However, I believe there is still opportunity… and it’s not with large cap tech stock.
Jobs Data: Choose Your Narrative
Today we learned that December added 216K jobs. CNN reported it as a “red hot” print. Was it? From mine, the headline number offers us very little. For example, what I want to know is the following (a) where are the jobs are being added (e.g. public vs private sector and what sectors); (b) what are people being paid per hour (is it rising or falling?); (c) are people working longer hours (as part time work doesn’t pay a mortgage); and finally (d) what’s the prevailing trend (as one month’s data doesn’t account for much). The headline number doesn’t provide this detail – therefore we need to dig a little. My quick take – this report is weaker than what the headline suggests.
89 Books to Make You Smarter
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time—none” – Charlie Munger. This post includes a collection of 89 books I’ve read which will make you smarter (and a better investor). Old Charlie also told us “.. if it’s wisdom you’re after, you are going to spend a lot of time sitting on your ass and reading”. Amen to that.
For a full list of posts from 2017…