Broker Check

Mosaic Asset Partners - Technology & AI Shine In An Otherwise Quiet Week

February 23, 2024

This has been a relatively quiet week for our financial markets as a collective deep breath seems to have been in order. There is certainly nothing wrong with this and perhaps this even provided a much-needed break. The Federal Reserve does not meet in February and their next meeting is not scheduled until March 19th-20th. That gives us nearly a month to watch and listen for more clues as to the direction our economic train is headed. That hasn’t stopped many of the Fed Governors from making their usual rounds on the economic speech circuit, however. Fed Governor Christopher Waller spoke on Thursday and said that he was looking for more evidence that inflation was cooling before cutting interest rates. “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole,” he said. Patience remains the operative statement from most of the Governors at this point. While that may be hard for many, the old saying “if it ain’t broke, don’t fix it,” sentiment is in place. Making a wrong move, or any move at this point, would seem reckless and unwarranted. Simply doing nothing seems about right for now.

One area that was not quiet this week was the AI and Technology arenas. Nvidia (a semiconductor company), clearly the biggest player in the AI world at the moment, released their earnings on Thursday. Corporate earnings and profits blew past Wall Street analysts expectations illustrating that the recent boom in AI-related areas is not slowing anytime soon. Nvidia has been the primary beneficiary of the recent technology industry obsession with large artificial intelligence models, which are developed on the company’s pricey graphics processors for servers. The innovations taking place at a rapid pace are both exciting and scary at the same time. Our world is clearly changing in many ways, and these powerful tools are being deployed in many ways around us. While it may be hard to imagine the impact this revolutionary new technology is having on you personally, I can assure you it is in ways you may not even be aware of. Most major companies, and many small ones have been or are in the process of deploying AI throughout their processes. “Strong demand was driven by enterprise software and consumer internet applications, and multiple industry verticals including automotive, financial services and health care,” Nvidia said in commentary provided to investors. For an older generation of workers this may seem scary but for our younger generation of new “learners,” the opportunities this will present seem endless. Stay tuned, this ride will only get more interesting in the months and years ahead.

With February quickly coming to a close (where is the time going!!), our year is rapidly moving along. Our financial markets remain healthy at this point, with the S&P 500 sitting just above the 5,000 mark and up +6.6% YTD. Two of the S&P 500’s biggest market cap companies, NVDA +36% (ranked #3) and META +32% (ranked #5), which account for about 6.5% of the total index market cap, are a big reason why the index has performed well YTD. We need to keep this in mind as we evaluate where things stand right now. We would still like to see more improvement across other sectors and that is slowly starting to occur. While there is some feeling that things could be overvalued right now, corporate earnings and underlying fundamentals remain robust. We continue to monitor and adjust our underlying portfolio holdings where appropriate and needed. However, like the Federal Reserve, simply “sitting tight” and watching feels right at this moment. With cash and money market instruments still producing attractive yields, the feeling of being left out completely doesn’t exist right now.  

Have a wonderful weekend!

\https://www.cnbc.com/2024/02/18/companies-2024-cost-cuts.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

https://www.cnbc.com/2024/02/22/feds-waller-wants-more-evidence-inflation-is-cooling-before-cutting-interest-rates.html

https://www.cnbc.com/2024/02/23/us-treasury-yields-investors-consider-monetary-policy-path-ahead.html

https://www.cnbc.com/2024/02/21/nvidia-nvda-earnings-report-q4-2024.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.