Economic growth has cooled noticeably in recent quarters. GDP growth clocked in with an impressive 4.9% reading in the Q3 2023. In the fourth quarter, growth fell to 3.4% before being chopped more than half to 1.6% in the preliminary reading of Q1 2024. In addition, inflation has been stubbornly ‘sticky’ so far in 2024 after falling consistently since the CPI peaked at 9.1% in June 2022. But, stocks continue to rise as most investors still believe in the “soft landing” narrative that has propelled equities forward since last October.
Jamie Dimon, CEO of JP Morgan, one of the smartest guys on Wall Street, cautioned that the market is pricing in a much higher chance of a soft landing occurring than it deserves. He suspended JPM’s stock buyback program stating that JPM stock, selling at 2.3 times book value, simply wasn’t reasonably valued.
With the S&P 500 return ytd at 10% vs the annual return of a CD at 5%, $6 trillion of investor funds are stuck in safety of the money markets while the stock market continues to climb higher. What awaits us between now and the end of the year?
Future Wealth’s View
Standing with Jamie Dimon is a very lonely space for an investor to inhabit right now as the market continues to move higher. Of course, we could all be proven wrong and Jamie Dimon will have his moment on CNBC if the economy craters and inflation surges up again. But, at Future Wealth LLC, we believe that US companies will continue to post strong results and the higher interest rates, while having some impact on real estate, has not impaired consumer spending.
That said, unanticipated surprises could take the market down in a hurry. One of them, we had stated in our previous report (link is here – (https://futurewealthllc.com/
As the saying goes “No rest for the Wicked”.