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Monthly Market Commentary - January 2024

January 17, 2024

At Landmark Wealth Management Group, it is important that you are well-informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month. If you have any questions or would like to continue the conversation, please reach out.

Jobs, inflation, and expectations around what the Federal Reserve may or may not do continue to be the focus of markets as 2024 begins. The latest jobs report showed December exceeded most economists' expectations, with the economy adding 216,000 jobs1, surpassing estimates by 41,0002. Further, wages rose more than anticipated, having gained 4.1% compared to December 20221. While the unemployment rate remained steady at 3.7%1, the drop in labor force participation will be an area to watch. Overall, last year saw 2.7 million new jobs as the economy1 defied strongly held expectations of a recession arriving sometime in 2023. Despite the stronger-than-expected jobs report, the overall gradual cooling trend continues to be the predominant belief across economists, though wage growth could spell trouble for dovish expectations around Federal Reserve policy in 2024.

On the inflation front, the Consumer Price Index (CPI) rose by 0.3% in December and 3.4% over the year3, both faster than the market had expected and an acceleration from November. However, yearly changes in core CPI, which excludes the more volatile food and energy components, continued to improve in December, though just barely, rising 3.9% versus the 4.0% gain from the November report. Shelter continues to play a significant role in the headline inflation story, despite indications and expectations throughout the year that it would slow. While one month’s report does not indicate a trend, if a trend were to form, the current expectations for the Federal Reserve to begin cutting rates early this year could be in jeopardy. As the market has continued to show over the last year, changing expectations can quickly create ripples and volatility across capital markets.

The bottom line: The market's growing consensus on a substantial dovish pivot from the Federal Reserve this year fueled the late 2023 market rally. However, the same expectations may also set the stage for potential volatility if that picture were to shift again. The market saw multiple consensus expectations shifts in 2023 and this year may be no different. While only time will tell, investors will likely stay focused on the upcoming inflation, retail sales, and jobs reports to continue to take the temperature of the health of the consumer. At some point the relentless focus on the Federal Reserve will shift, but not yet.

Sources:

  1. Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
  2. Consensus estimate from Bloomberg’s survey of economists
  3. Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Landmark Wealth Management Group is an SEC registered investment adviser.   SEC registration does not constitute an endorsement of Landmark Wealth Management Group  by the SEC nor does it indicate that Landmark Wealth Management Group has attained a particular level of skill or ability.  This material prepared by Landmark Wealth Management Group is for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Information presented herein is accurate as of the time it was written. Advisory services are only offered to clients or prospective clients where Landmark Wealth Management Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Landmark Wealth Management Group unless a client service agreement is in place  This material is not intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Landmark Wealth Management Group is not an accounting firm. Please consult with your tax professional regarding your specific tax situation when determining if any of the mentioned strategies are right for you.