Michael Carrico

Illustration of chess game with magnificent seven logos and

How Are the Magnificent 7 Faring Through Earnings Season?

The S&P 500 closed last week down 0.42% ending a five-week winning streak and pulling back from a string of record-breaking highs. The dour mood continued into the beginning of this week and the S&P 500 only barely squeaked out a positive return in the last few minutes of trading on Wednesday leading up to the Nvidia earnings release only to turn on a dime and power back on Thursday. There are explanations for this activity which I’ll explore below. However, the bottom line is that volatility is back in the markets, and we are seeing that in the reactions to earnings announcements this quarter. As of Wednesday night, the companies dubbed the Magnificent 7 have all reported earnings and they seem as good an example as any to explore how changing expectations are impacting stock prices.

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Should Investors Worry About the U.S. Presidential Election?

Investing in an Election Year: Should Investors Worry About the U.S. Presidential Election?

Should Investors Worry About the U.S. Presidential Election? Happy New Year, everyone! I know we’re already nearly a month into 2024, but this is my first article to our clients in the new year and I just took down my Christmas tree embarrassingly late in January, so it still feels appropriate. At the beginning of every year, the financial media is awash in market forecasts. It should come as no surprise that I am not one for market predictions, but it is valuable to consider the developments so far in 2024, understand the market environment we find ourselves in today, and think about the challenges and opportunities the coming year may have in store. One topic I expect to come up in conversation this year is the upcoming U.S. presidential election. Throughout my career, every presidential election cycle has brought fresh anxiety for investors and questions about what a given election outcome might mean for the markets. So, we’ll consider that question today and hopefully avoid some apprehension later.

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Collage with financial news and families enjoying the holidays

The Important Things: tuning out the financial noise to focus on what really matters

As the end of the year rapidly approaches and we all spend time with our friends, family, and loved ones, it feels as though time is accelerating and 2023 will be in the past before we know it. Reflecting on the topics of blog articles this year, I wrote about legislation a few times including changes to Roth rules, debt ceiling battles, and banking regulation interventions. Macroeconomic conditions, geopolitical tensions, and market reactions to both were also common topics. Perhaps the most common subject was the Federal Reserve and the Federal Open Market Committee (FOMC), and it was so frequent that we need not count. There was another Federal Reserve meeting this week and, while the Summary of Economic Projections was a point of some interest for the markets, reflecting on such a strange year for economics and the markets got me thinking of the bigger picture. Perhaps it’s the season, but it feels like a good time to take a step back and reflect not on the noise of the financial press and the minutiae of the financial markets, but on the reasons we all bother to get up in the morning, go to work, do the hard things, and invest for the future.

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citrus fruits

Your Guide to HSA Year-End Contributions

With the year swiftly coming to a close it’s time for taxpayers to think about those year-end financial housekeeping items.  While there are many topics to consider such as year-end tax deadlines, portfolio allocation, and the cost of the holidays, what we’re thinking about today is Health Savings Accounts or “HSAs.” Today we’ll review HSA contribution limits and deadlines, the value of HSAs as a tax planning and retirement planning tool, and investing your HSA balance.

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Behavior Gap

What is the Behavior Gap?

Any time the market moves several percentage points in a week, let alone a day, it can make an investor wonder if they need to be doing something, anything, in response. I regularly get questions from clients around the time of big moves in the markets in either direction. Should the strategy change? Am I missing out? Could I be better positioned? One example of such a move was Tuesday of this week when CPI data was released and came in slightly better than expectations. The S&P 500 index was up 1.91% at the close while the Russell 2000 index, a widely followed small-cap U.S. stock index, ended the day up 5.49% and U.S. Treasury yields dropped sharply. Today we’ll examine what might explain that big day in the markets, why investors might feel a need to act, and whether taking some action makes sense.

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Attention-grabbing Headlines: Wars, Money Supply, Interest Rates, and Bitcoin  

There are always headlines moving the markets. Well, perhaps it’s more accurate to say that there are always headlines and the markets are always moving. As to whether those headlines are the cause of market moves is open to debate. Regardless of the cause and effect relationship, headlines can create headaches for investors, and it can be difficult to know if those headlines are worth worrying about. So today I would like to look at a few headlines that have jumped out at me in recent weeks. Among those attention-grabbing news stories are geopolitical conflicts, the United States money supply, interest rates (yet again), and bitcoin.

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Cybersecurity and AI

Spam, Scams, and… AI?

I don’t know about you, dear reader, but lately it seems the volume of spam I have been receiving has ballooned wildly. Spam certainly was not born with the advent of the internet and has been a reality of the connected world even before most households had an AOL installation disc arrive in the mail. Remember chain letters? However, just this year I have noticed more and more phishing emails are getting through the spam blocker on both personal and professional inboxes.

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Women reading a newspaper with color collage elements over the photo

Let’s Talk About Headlines: Jackson Hole, China, U.S. Banks, and Nvidia

With earnings season winding down and this week’s relatively light economic calendar, the talk of the week has been around Federal Reserve Chair Jerome Powell’s speech at Jackson Hole which is underway as of the publishing of this article. One of these days, speeches by Federal Reserve Open Market Committee (FOMC) members and monetary policy decisions may once again be humdrum affairs which don’t compel regular newsletter updates, but that time has not yet come.

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Dove and Hawk with fed building and chart of interest rate increases

The Fed and Interest Rates: A Tale of Two Birds

Is it the best of times or the worst of times in the economy? It seems to depend on what data you review. On the negative side of the scale, the Conference Board’s Leading Economic Index is deeply negative, and the US Treasury yield curve is deeply inverted. We have not seen such stark indicators without a resulting recession in the last 50 years. On the other side of the scale, the S&P 500 and Nasdaq indices are up double digits year-to-date while the unemployment rate is still historically low and inflation, as measured by the year-over-year Consumer Price Index (CPI), is falling and has been for a year since peaking in June 2022. In fact, due to falling inflation, the year-over-year measure of US real (inflation-adjusted) average hourly earnings is positive after two years in the negative. Is it possible that the negative indicators are wrong this time?

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AI Investing

Let’s Talk About AI 

So just what is going on with new developments in AI and how should we be thinking about it?  This is a sprawling subject, and I am not an expert in artificial intelligence.  My apologies in advance to any AI engineers who disagree with my understanding of the subject.  By no means do I expect to cover everything in this newsletter, but today I would like to discuss what AI is, what the new developments are, and give some perspective on how investors might think about AI.  Let’s dig in. 

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