We think a better question is, when will the Fed cut? The Purus Investment Committee is in the "higher for longer" camp. While inflation remains the central focus, the Fed highlighted that the equilibrium of risks between inflation and employment are coming into better balance. The Consumer Price Index (CPI) rose 3.4% in 2023, versus a 6.5% rise in 2022, while unemployment has slowly crept higher. Much of last year's inflation readings were due to energy being down 2% over that period. While Core CPI is still up a disquieting 3.9% from a year ago (compared to 5.7% in 2022), we believe the Fed is likely to have more trouble getting broad measures of inflation, like the CPI, down to its 2% goal without a little more time for the medicine to work. The question then becomes: when and how much to cut? Stay tuned….
"Despite higher valuations we do find that the leading U.S. tech companies continue to offer some of the highest quality growth exposure, boasting robust cash balances, capex spending and profitable business models. But we also expect to see a broadening out in market performance this year, for a few key reasons:..."
"What a difference a year makes. At the start of 2023, market pessimism was widespread, investors braced for a recession, and many expected another down year in stocks. Instead, the economy proved remarkably resilient, inflation declined at a rapid pace, and U.S. stocks, as represented by the S&P 500 Index, soared 26.3%. Talk about surprises."
"As we embark on a new year, the challenges ahead are well defined. Interest rates are elevated. Elections are upcoming. And U.S. stock indexes are near all-time highs. Are these events setting the stage for a disappointing pullback or another bull run?"
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