Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.
For the last year and a half Albion has been sponsoring children at the Woodrow Wilson school, a Salt Lake City elementary school where 90% of the students qualify for food aid. Each month in conjunction with the Utah Food Bank we fill grocery bags for the children to take home to their families.
The students are just like you’d expect from a group of youngsters. Curious, energetic, funny, loud, silly, and occasionally contemplative. The food makes a significant difference for them and their families. For us it highlights the similarities among all of us. Regardless of economic circumstance most of us hope to have strong and caring relationships with our family and friends and live in a world where we are safe and find fulfillment while earning a reasonable living. Most of us do strive to get along with our neighbors despite differences of opinion we may have. You wouldn’t know that by reading the headlines. A recent sampling (with names removed) includes:
“Presidential Candidate augers divisive year in angry Christmas rant”
“2024 could bring a radical upending of the global order”
“The Supreme Court could correct Politicians’ huge mistake”
“With support fading and corruption building, will politician quit the race?”
“National anthem kneeler cancels Christmas and gift giving”
“Campus antisemitism finally gets its reckoning after students cheer terrorism”
From these headlines, and hundreds more like them, one might surmise that our overriding emotions are anger and fear. Yet that’s not the case. Yes, there is anxiety and anger in the population. And yes, unfortunately some of the most prominent voices feel they benefit by stoking anger, resentment and fear. Yet the facts show a different story.
Per FBI data violent crime fell 8% in the third quarter of 2023 compared to the same quarter last year and property crime fell 6.3% to its lowest level since 1961. But the dire headlines do work. Per Gallup 92% of Republicans, 78% of Independents and 58% of Democrats believe crime is rising.
We hear a lot about unemployment. Some choose to focus on job losses and high unemployment while others are focused on job creation. The current unemployment rate is 3.7% which is close to the low end of the long-term historical range. That’s impressive particularly in light of the rise in interest rates over the last several quarters. However despite high employment and consistent economic growth over half of us think the economy is getting worse, per a recent CNN poll.
Misleading headlines can be found regarding virtually any quantifiable measure. Why do we bring this up in an Albion letter? To highlight that in the work we do we must look past the headlines to what the underlying data tells us is actually happening. While there are clearly challenges in the world, the economic outlook has several bright spots. The Federal Reserve effort to rein in inflation is working. Higher interest rates, while clearly slowing economic activity, have not tipped us into a recession.
Consumers have remained resilient as spending has held up even in the higher rate environment. Companies continue to innovate and in many cases continue to show solid year-over-year earnings growth. Our professional goal for 2024 is to continue to scour the many opportunities to invest in what is working in the world and build and manage portfolios around those bright spots. Our personal task is to see the humanity in everyone and do what we can with our family, friends, colleagues and peers to ratchet down the temperature that headlines work to inflame. We wish you all a peaceful and prosperous new year.
Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance.
US equities were mixed last week. Large cap cyclicals rose, including energy, financials, materials, and industrials, pushing the Dow to a record high during Wednesday’s session. However, sectors like technology, communications, and healthcare finished lower, resulting in small losses for the S&P 500 and Nasdaq Composite. Small and midcap US stocks were also down slightly, while international stock indices managed to eke out small gains.
Last week’s most prominent market action was in rates, as Treasury yields moved higher on the back of PPI inflation and retail sales figures that blew past consensus estimates. The 10-year finished the week at 1.34% (+13bp w/w), while the 30-year closed at 2.13% (+12bp w/w). Credit spreads compressed slightly, particularly in high yield, but not enough to prevent price declines across most spread-oriented sectors of the bond market.
Oil finally took a pause, finishing slightly lower on Friday after trading above $60/barrel (WTI) for most of the week. Market participants are anticipating a rise in OPEC+ production, and a short-term drop in demand as refineries take time to recover from freezing weather across much of the southern US.
In other economic news, weekly jobless claims remained range-bound, while residential building permits rose to a fresh 15-year high of 1.88 million (SAAR), a positive sign for housing and the broader economy in 2021. See the Chart of the Week for a time series.
Every Monday morning, download our Weekly Market Recap for Commentary and Data, with Economy and Earnings, Equity Valuation, Interest Rates, and Inflation, including infographic charts.
