December 4, 2023
Good morning,
Much of the recent rally can be attributed to the belief by investors that inflation is moderating with interest rates coming down in anticipation of Fed rate cuts. And by rate cuts, the market means a cut in February and over 100 bps of cuts next year. Juxtaposing this outlook against the one entering November, and you see why November saved every money manager’s year – it has been a 180-degree change.
Are the stock and bond moves over the past four weeks too much, too soon? Probably, but the direction of the moves seems justified for the end of a Fed tightening cycle. It would seem that both the stock and bond markets have moved to levels where the risk of a pullback is high. In the past ~100yrs, December’s following November’s that were up over 5% have an average return of almost +0.5% with a tight range (Bloomberg Data). Of course, that data includes the traditional Santa Claus rallies. So, a pullback ahead of Santa’s arrival foots with the historical record.
The big event for markets this week is Friday’s November employment data. And while that’s a long way away, payroll Friday does stands out as the obvious point where risks of a snap-back in bond yields are higher. When you look at what’s priced for the Fed next year (above), it feels like it will be easier to take away 50 bps of cuts than to add another 50 bps in.
Be well,
Mike
Disclosures
Investment advisory services offered through Robertson Stephens (“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 objectives, targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are speculative and involve substantial risks including significant loss of principal, high illiquidity, long time horizons, uneven growth rates, high fees, onerous tax consequences, limited transparency and limited regulation. Alternative investments are not suitable for all investors and are only available to qualified investors. Please refer to the private placement memorandum for a complete listing and description of terms and risks. 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. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens in the United States and elsewhere.
Robertson Stephens paid no fee to obtain recognition but has paid licensing fees to reference its appearances on the Newsweek, USA Today, and FA Magazine rankings lists. See Awards Disclosures
Questions
How Does Robertson Stephens Manage Investments?
We build personalized portfolios based on your specific situation, including your risk tolerance, tax sensitivity, liquidity needs, and values. We use a disciplined approach that balances long-term growth strategies with short-term opportunities when they make sense. We continuously monitor your investments and adjust as needed, drawing on institutional-quality research and due diligence.
What Is Robertson Stephens’ Investment Philosophy?
Our investment philosophy focuses on protecting and growing your wealth through a disciplined, diversified approach that’s tailored to your specific situation — your risk tolerance, tax needs, and values. We blend long-term strategic investing with tactical opportunities when they make sense, using both public and private markets where appropriate.
Is Robertson Stephens Fee-Only, Fee-Based, or Commission-Based?
We work on a fee-based model, which means our compensation is tied to the assets we manage for you rather than commissions on products we sell. This aligns our interests with yours — when your portfolio grows, we do better too. The specific fee structure varies by client based on your situation and needs.
