Quarterly Commentary

What’s Mine is Yours

We saw extraordinary resilience in the financial averages during the last quarter, particularly in the number of new highs and other advancing issues outpacing analyst’s expectations. In doing so, any uncertainty about trend sustainability and investor confidence was upended. The market’s current plateau has all the doubters in an uncomfortable place….somehow they just love a good “negative” narrative. No question, however, battle lines are being drawn which clearly delineate the bulls from the bears.

The significance of this emotional dichotomy is that action plans, political discourse, and financial reasoning….good or bad….can be now be qualitatively identified.

As we write, earnings modifications are accelerating, acknowledging that January 1 iterations were too timid. While growth might not be extraordinary for all, it clearly gives to those who thought the market would decline in 2024 something else to think about. Our year-end GDP forecast is on the higher end of the spectrum, and more aggressive than we wrote in December. Clearly, most current “revisions” of the forecasts are about upwards surprises, not downwards.

The trouble with the pessimist’s point of view is that they have difficulty separating what’s happening in the economy from what they see around the kitchen table; neither are directly correlated, though. In the past, we coined the term “parallel disconnect” to refer to this oxymoron. But with the enormous amounts of cash held in abeyance by consumers and businesses we believe this time that there is a sufficient safety net of capital that will keep upside performance percolating. It matters not the capitalization or geography of the investment, only that the goal is to build a better planet for its inhabitants. In other words, moderation in one sector will not necessarily disrupt the success of any other. There are simply too many things to get done that we should expect….or encourage….a global recession. An old sports maxim states that “you can’t win a game in the first quarter but you sure can lose it.”