Broker Check

Mosaic Asset Partners - Our Old Dance Partner, Mr. Volatility, Has Returned

April 19, 2024

The sunnier and longer Spring days are finally creeping back into our lives again. Something we can all certainly welcome and appreciate. But along with those longer days and new green beginnings, another old friend appeared on our front lawns this week in an unwelcome manner, Mr. Volatility. Oh, how we have missed you. NOT! We have been spoiled and complacent in not missing the ups and downs of the market. After a few years of Covid and interest rate spikes, a steady and upwardly moving trend has been the norm. But alas, it was bound to happen. Just as we reach up to touch the sun, or crest the top of a hill, there are always reminders that what goes up, must come down. Or better yet, get burned! These moments always serve as good reminders to keep things in perspective from where we have been, and where we are going. As many of you often hear me say, “a strong, healthy plant needs to be pruned back from time to time.”

So, what gives? For me, it seems fairly straightforward. We had a momentous run in 2023 and that carried right over into the year as I have discussed recently. Over the course of this week, there were several interesting headlines. Retail sales increased 0.7% for the month of March, considerably faster than the Dow Jones consensus forecast for a 0.3% rise, though below the upwardly revised 0.9% in February, according to Census Bureau data that is adjusted for seasonality but not for inflation. Consumers simply did not slow down at the register, at least at the pace expected.

On the heels of that report, we saw the March housing data points, which were released on Tuesday.  Sales of previously owned homes dropped 4.3% in March compared with February, to a seasonally adjusted annualized rate of 4.19 million units, according to the National Association of Realtors. Sales were 3.7% lower than in March 2023. This came after a big jump in sales in February. The main culprit for the perceived slow down is likely the jump in mortgage rates again. The trend as of late seems to show that as rates push closer to 8%, sales slow, but when they drop down closer to 7%, they rebound. As the Fed ponders their next move, the volatility in the housing market will likely continue.

On top of these somewhat conflicting data points of highs and lows, we are now fully engaged in earnings season. So far, things look decent on that front. As of this past Tuesday, about 8% of S&P 500 companies have posted first-quarter results. Of those companies, nearly 80% have exceeded analyst profit forecasts, FactSet data shows. While we still need to see much more evidence in the weeks ahead, so far, so good. But, as is usually the case, the forward looking guidance is always extremely important. Analysts and investors alike are constantly looking for clues as to the state of things. Whether its spending patterns or cost controls, little nuggets of wording by companies are extremely important. As we plow through the next few weeks, I don’t think we should be surprised by more volatility and mixed performance. We have an ever present and unstable geopolitical environment, another sensational “trial” to endure, and of course more earnings and economic headlines to sift through. The media and its massive engine will be running in high gear. As always, we will do our best to sift through it all. With $8 trillion+ dollars still sitting mostly in cash-like instruments waiting for the right window, the downward path will likely only go so far. Idle cash doesn’t like to miss a good opportunity.

Have an excellent weekend!

https://www.cnbc.com/2024/04/17/stock-market-today-live-updates.html

https://www.cnbc.com/2024/04/18/mortgage-rates-hit-highest-level-of-the-year-and-could-go-even-higher.html

https://www.cnbc.com/2024/04/18/march-homes-sales-dropped-despite-a-surge-in-supply-heres-why.html

https://www.cnbc.com/2024/04/15/retail-sales-jumped-0point7percent-in-march-much-higher-than-expected.html

Christopher E. Wasson, CFP®

President

Mosaic Asset Partners, LLC

1122 Kenilworth Drive, Suite 310

Towson, MD  21204

410.821.0089         fax 410.821.5993

MosaicAssetPartners.com  

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS.  Investor Disclosures: https://www.kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.