Click here for the PDF: The Monthly May 2024

 

With this commentary, we plan to communicate with you every month about our thoughts on the markets, some snapshots of metrics, a section on behavioral investing and finally an update on MacNicol & Associates Asset Management (MAAM). We hope you enjoy this information, and it allows you to better understand what we see going on in the marketplace.

 

“Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street”.

John C. Bogle, Vanguard Group Founder

Trying to have a conversation as I search for my hat and disinflation…

One of my daughters happens to be an Ontario cheerleading champion. If you have ever been to a cheerleading competition before, you have no doubt experienced the signature feature of such an event: noise. Cheerleading competitions offer attendees noise levels that rival a Jumbo Jet taking off near Maho Beach in St. Maarten. You see Maho Beach borders St. Maarten’s Princess Julianna Airport [literally] and offers thrill seeking idiots the opportunity to sustain potentially irreversible hearing damage while being tossed into the Atlantic Ocean. Normal conversations are out-of-the-question at Maho Beach, and by the time you even notice that your hat is missing, it will be well on its way to the bottom of the sea. As to disinflation, that might be submerged even deeper.

Disinflation

The financial market equivalent of a jet engine must be US Federal Reserve Chair Jerome Powell. Investors the world over line up for Mr. Powell to thrust his central bank’s latest policy flight plan upon them, often, without even realizing that their own investment strategies could be blown away in the process. Mr. Powell participated in a press conference on May 1st, 2024, and he discussed The Fed’s decision to keep interest rates at 5.25%-5.50% against the backdrop of inflation that is certainly off peak levels but delayed, turbulent and frankly not all that clear to grasp, nonetheless. Mr. Powell said he expects inflation to fall later in the year, but he fell short of giving all clear about inflation moving sustainably to the bank’s target of 2%. If at this point you are confused, you are forgiven. Why any grown man or woman would wish for themselves to be blown into the ocean by a plane is beyond us too. Oh, and didn’t the US economy cool during the last quarter?