BakerAvenue Wealth Management

Stocks have been setting a series of higher highs and higher lows over the past year (top portion, below). The sharp move down recently has come with a slight deterioration in new highs vs. new lows (bottom portion, below). While still positive on balance, it will be important to monitor the progression of market internals over the next few weeks. Source: Bloomberg, BakerAvenue. As of 12/19/2024. #TechnicalThursday

Change is in the air, with the political backdrop taking center stage. A new regime in Washington, D.C. includes deregulation, less stringent antitrust enforcement, tax cuts, tariffs, and immigration curbs. Impacts to the economy will undoubtedly vary, and we are prudently monitoring the opportunities and challenges the new regime brings. But it is not just politics. Read the December BakerAvenue Prudence Indicator to learn about other factors undergoing a regime change and impacting the investment backdrop: https://bit.ly/4fcogZa

We suspect politics won’t be the only factor undergoing a regime change. Investors will also need to navigate historically wide valuation dispersions, new interest rate policies, and converging growth trends, to name a few. While trends across our analytics remain broadly supportive, variability in asset prices should increase going forward. We suspect the environment is ripe for thoughtful active management. As always, we defer to our technical, fundamental, and macro disciplines to assess the risks and guide our outlook. Watch our December Market Update from Chief Investment Officer, Doug Couden, CFA.

The job market has normalized. An important input in the “soft landing” narrative was lowering the amount of job openings while not increasing the unemployment rate. So far, so good. Source: BLS, Strategas, Bloomberg, BakerAvenue. As of 12/9/2024. #MacroMonday

Domestically, half of the equity return in 2024 has come from valuation expansion. Internationally, earnings have contributed more. We wouldn’t be surprised to see these influences swap in ’25. Source: Goldman Sachs, Datastream, Bloomberg, #BakerAvenue. As of 12/6/2024. #FundamentalFriday

Markets are on decent technical footing as we enter the holiday season with many indices near all-time highs. Fortunately, strong trailing returns have not implied poor subsequent performance. Source: Goldman Sachs, Bloomberg, BakerAvenue. As of 11/27/2024. #TechnicalThursday

Effective year-end tax planning isn't just about reducing your tax bill; it's about setting up a strong financial foundation for the future. Here are the key deadlines and strategies to consider, especially for retirement accounts, charitable contributions, and general wealth management. https://bit.ly/3AA3nt0. #BakerAvenue

Interest rates continue to carry material influence. An inflation spike would send rates higher, while a growth scare would send them lower. Currently, we have a lower, but not low, view on interest rates. Source: BCA, Fed, Bloomberg, BakerAvenue. As of 11/18/2024. #MacroMonday

Valuation dispersion remain wide. While growing faster, the top end of the market is a bit rich relative to history. However, the median multiple is in line with historical averages. Source: Factset, Strategas, Bloomberg, #BakerAvenue. Data as of 10/31/24. #FundamentalFriday

We’ve been asked about our view on politics quite a bit recently, naturally. Our common response is that there are bigger forces at work impacting markets, and thus client assets. But, as fiduciaries, having a well-vetted view is essential to prudent asset management. Our view towards this election was grounded on a belief that, no matter who “won,” a decisive outcome would be a clearing event as uncertainty is the often the biggest headwind to economic activity, valuations, and investor sentiment. Read the full commentary on "Uncertainty Ease": https://bit.ly/3AQyQaa