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2024 Second Half Outlook

Posted By Lineweaver Financial Group
July 26, 2024 Category: Markets, Finance, Outlook

News headlines have been volatile this year with many geopolitical issues, economic worries, and, most recently, President Biden exiting his re-election campaign.  Nevertheless, the stock market has done well and continued to “climb the wall of worry.”  This reality serves as a good reminder that ignoring most news headlines and political noise is typically the best investment strategy. Since the start of the year, we have maintained a positive outlook and positioning, especially with U.S. large-cap stocks. That is because of our view that AI-related investments, onshoring, and cooling inflation will benefit earnings for these types of companies the most.  Despite some choppiness, the data tells us this scenario is playing out as expected. With manufacturing surveys softening and business confidence muted, markets may begin to over-discount a sharper slowdown. Nevertheless, we continue to believe that the pace of economic growth is moderating at a goldilocks pace, and inflation is cooling sufficiently to allow the Federal Reserve (Fed) to begin easing before the end of the year.  We expect U.S. growth to be close to trend at about 2.0% by the fourth quarter and inflation to continue cooling toward the Fed’s 2% target by mid-2025.  This should be a good environment to support our view on equities overall and offer a positive environment for bonds. Outside the U.S., the European economy is expanding once again, activity in China i

Taylor Swift and ‘Barbie’ are helping the economy

Posted By Lineweaver Financial Group
July 27, 2023 Category: General, Economy, Recession, Sales, Markets

When we think of economic indicators, our minds typically go to the state of the housing market, inflation or unemployment rates. Nevertheless, as of late, there have been some surprising economic drivers originating from unexpected sources.  To understand this sensation, look no further than Taylor Swift’s “Eras” tour and the “Barbie” movie. The blowout success of Swift’s tour combined with the record-setting box office success of the “Barbie” movie is showing up in microeconomic aggregates.   The Federal Reserve’s historic rate hikes haven’t brought on a recession yet. Right now, we’re sitting in what’s known as a “Goldilocks economy,” where it’s not too hot and not too cold. Currently, it looks like consumers are prioritizing experiences and entertainment over buying things. That’s evident when looking at Swift’s tour, which is estimated to generate $4.6 billion in consumer spending in the United States alone1. Fans of Swift are spending money on hotel rooms, merchandise and dining out at restaurants. Some fans are dolling out money for custom outfits, manicures and hairstyles. Businesses are also creating special Swift-themed items for fans to buy. Fans are even visiting local museums, which led to The Country Music Hall of Fame having the best month in its 65-year history. The museum sold 114,000 tickets the month Swift had her Nashville

Look back 2022 ­— Look ahead 2023

Posted By Lineweaver Financial Group
January 25, 2023 Category: Finance, Markets, Bonds

COMMENTARY BY JERRY HERMAN, CFA® As we sit in the darkest days of the solar year, we are encouraged to know that the days ahead will have more light – the days will be brighter. And for the financial markets we are optimistic that this will be true in the figurative sense as well. 2022 was a year of recognition and reality - recognition that the stimulus endeavors of prior periods needed to be unwound and the reality that the process could be painful. 2023 offers opportunities and optimism - opportunities being presented in sectors and asset classes that we haven’t seen for some time and the optimism that the Fed will get it right and avoid a deep recession, and global and domestic political and social tension will ease.   In 2022, the forces of pandemic-induced supply chain disruptions, exceptionally high consumer demand for goods such as housing, autos, and appliances, and services like travel and entertainment, combined with an energy shock brought on by the Russia-Ukraine conflict, drove inflation to its highest level in four decades! In June, the inflation rate hit 9.1% and averaged just over 7% for the year, more than double the historical average of about 3%. To combat inflation, the Fed increased interest rates seven times during the year to 4.25-4.5%, levels not seen since 2008.  The year was difficult for investors. Facing the headwinds of rising interest rates, a very tight labor market, and capacity and supply constraints in ma

Q2 2018: Economic Commentary

Posted By Lineweaver Financial Group
April 02, 2018 Category: Q2 Newsletter, Economic Commentary, Markets

Global financial markets posted mixed results during the first quarter of 2018 amid a spike in volatility on concerns surrounding higher interest rates and rising inflation expectations. Meanwhile, the Trump Administration’s tariff announcement on steel and aluminum led to heightened geopolitical tensions with several U.S. trading partners, sparking concerns of a trade war. We present a few highlights from 1Q18 below: • U.S. equity markets sold off sharply in late January and early February, resulting in the first correction (10% drawdown) since early 2016. Stocks moved mostly higher for the remainder of the quarter in volatile and choppy trade, with large intra-day moves the norm. Despite the volatile environment, the S&P 500, the Dow Jones Industrial Average and the technology-heavy Nasdaq Composite managed to hover near their all-time highs. On the economic front, preliminary estimates indicate fourth quarter GDP slowed slightly more than initially thought due to slower inventory growth. • Developed international equity markets produced mixed results during the first quarter on worries that a strengthening U.S. economy may lay the groundwork for a more aggressive Fed. Gains came out of the Pacific region, while Europe lagged. On the political front, the populist movement was back in focus as disenchanted Italian voters opted for anti-establishment parties in an election that yielded no outright winner. In the emerging markets, returns were propelled