Three Key Data Points You Need Know This Week
1. Macro Update with NB.
- Strategas’ President and Head of Portfolio Strategy, Nicholas Bohnsack (NB), sits down with Envestnet’s Co-Chief Investment Officer, Dana D’Auria, to run through his latest macro thoughts on the overall investment landscape. Watch Part 1 here: Envestnet’s Quarterly Market Rundown with Nicholas Bohnsack
- Items of note which NB and team are watching as we head towards November elections:
- Inflation and the volatility of inflation expectations.
- Level-setting valuations in line with interest rates and operating margins.
- Identifying organic drivers of growth to pull capital into the economy and drive expansion.
- Prior rate hikes historically have had an inverse relationship with corporate profitability and thus we are watching for reported net income and margin figures for any signs of sustainable weakness.
Source: FactSet Research Systems Inc. and Strategas Securities, as of February 13, 2024
2. Strategas’ Head of Policy Research, Dan Clifton's latest thoughts from his Feb 20th Policy Webinar:
- Reelection years have averaged significantly stronger returns over open election years since 1960. This year is, so far, trending with past re-election years’ average performance.
- Presidents have a strong incentive to keep the economy strong heading into re-election, as avoiding a recession has been 100% correlated with presidential re-elections as far back as 1912. Biden is directly employing, or benefitting from, several tools and actions currently.
- The 2024 election will be decided by voters in a handful of states, but that decision will have huge implications for markets as former President Trump is eyeing an aggressive trade and immigration agenda coupled with deregulation while President Biden wants to continue his green energy agenda and Democratic spending priorities. The outcome of the White House, House and Senate will shape how policymakers navigate a massive fiscal cliff coming in 2025 as the 2017 tax cuts, ACA premium tax credits, and other measures expire.
With such continued ambiguity surrounding the investment landscape due to the varying paths for policy, we believe the Strategas Global Policy Opportunities ETF (ticker SAGP) is well positioned to take advantage of such uncertainty as we enter into, what could be, a wild election year with numerous elections around the globe.
Source: Bloomberg LP and Strategas Securities, as of February 20, 2024
3. Thoughts from the Road.
- While discussion around Nvidia Corp (ticker NVDA) dominated most of the conversations Strategas’ Head of Technical & Macro Strategy, Chris Verrone, had on the road recently, their positive earnings results may have eased some anxiety.
- He finds it a bit odd that there is such focus on Nvidia at the expense of the rest of the market where he observes strength has clearly broadened amongst other sectors such as Financials and Healthcare.
- Additionally, greater than 80% of the small sample of institutional clients Chris spoke with, believe the next 5% move in the S&P 500 would be to the upside.
- Chris also notes that there seems to be a lack of focus on Japan, as their equity market just broke out to a new, almost 35 year high.
- Furthermore, while Strategas’ Chief Economist, Don Rissmiller, believes a rate cut won’t occur before June, consensus from Chris’s client meetings is for 50bp in rate cuts for the year…for now. Don also observes that rate cut expectations have been changing considerably of late, making a true consensus call difficult.
Source: Bloomberg LP and Strategas Securities, as of February 23, 2024
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This communication was prepared by Strategas Asset Management, LLC ("we" or "us" or “our”). This communication represents our views as of 02/23/2024, which are subject to change. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.