August 1, 2024
Good morning,
Markets got back to “normal” yesterday if we define normal as the way they’ve been acting for about 2yrs up until July. Mega caps reestablished their dominance yesterday (and this morning) at the expense of 290-ish other S&P stocks and the entire Russell 2000. Rotation was yesterday and Fed rate cuts are tomorrow once again. It is all so familiar. The VIX stayed steady at 16.5 – a bit of a surprise to me, I would have expected it to drop towards pre-July levels if normal is to last– we’ll see.
As widely expected, the FOMC kept the fed funds target range at 5.25% to 5.50% for the eighth consecutive meeting yesterday. It has been 12 months since the Fed last raised rates, longer than the median eight months. The Fed is preparing the markets for a September rate cut. Powell acknowledged that they have gained additional confidence and that if the data stays like it has been coming in recently, a September cut will be “on the table.” But he squashed talk of a 50 bp cut that some in the market were speculating. In his prepared statement, Fed Chair Powell suggested we should expect a series of cuts, not one-and-done. The real questions are how fast and how far will they cut? The market is giving a lot of credence to 75 bp of rate cuts this year. If that seems aggressive, it should – markets have been ahead of the Fed, trying to lead them (to no avail) to cut, since they stopped hiking last year. I doubt it is any different now.
In bond-land, yields continue to fall (prices rise) and the yield curve continues to de-invert and get closer to traditional steepening. The US-Treasury yield is poised to drop into the 3’s after closing at 4.03% yesterday – (finally, I was a few months early there, sorry).
Much more still ahead this week in company earnings and economic data. We’ll know soon whether normal lasts or is a passing fancy in a volatile environment (I lean toward the latter).
Be well,
Mike
Disclosures
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was compiled from sources believed to be reliable, but Robertson Stephens does not guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens. Performance may be compared to several indices. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. A complete list of Robertson Stephens Investment Office recommendations over the previous 12 months is available upon request. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are only available to qualified investors and are not suitable for all investors. Alternative investments include risks such as illiquidity, long time horizons, reduced transparency, and significant loss of principal. This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2024 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.