At the beginning of the year we laid out 8 themes to watch for this year. Let’s look back and see how these themes have played out and what we think may happen going forward:
The Magnificent 7:
Remember, we’re not talking about the Chris Pratt and Denzel Washington movie, but the 7 biggest stocks in the market: Apple, Google, Microsoft, Amazon, Meta (Facebook), Tesla and Nvidia. These stocks have continued to lead the way with 5 of the 7 outperforming the S&P 500 Year-to-date, and Nvidia being the story of the year already up 166%.* We continue to believe the theme of the Magnificent 7 will dominate headlines and market returns.
Artificial Intelligence/Tech:
Artificial Intelligence continues to make big strides and hit the mainstream with the biggest tech companies (Magnificent 7) leading the way. AI isn’t going away and in a short number of years will have everyday use cases for most Americans.
A year of the broadening?:
So far, this has not played out. Technology continues to dominate the market and sectors like Energy, Financials, Healthcare, and Industrials are all lagging the broad market. It has been a Tech-fueled rally since November of 2022.
Cash, Money Markets, & T-bills:
With interest rates still high and the Fed not willing to cut, interest rates on money market funds continue to be at or near 5%. The 1-month T-bill is currently yielding 5.34% on an annualized basis*.
Inflation:
Inflation continues to be real and affecting everyday purchases. While inflation has cooled in recent months, it is still well above the long-term average of 2.0% that the Fed targets. For this reason, they have not cut rates and have indicated they won’t be cutting rates anytime soon.
Bitcoin hits the mainstream:
The SEC approved a spot ETF for Bitcoin in January and the launch of these securities have been the most successful ETF launches in history. The BlackRock ETF has brought in over $20 billion of AUM into their fund in less than 6 months.
Election Year:
As mentioned in January, there have only been 2 down election years since just before World War II. It appears we are trending to keep that streak going.
Hard, soft, or no landing:
The ‘recession’ conversations have been tabled, indicating a “no landing” outcome for now. Earnings are strong which is another reason for the market rally since January.
Other than the broadening of stocks, most of these themes have played out as expected and our portfolios reflect these themes in them.
As always, reach out with any questions.