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Some Relief After a Brutal December and Weak Start to 2025: Weekly Market Commentary from Cabana’s CEO – January 17, 2025 

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This week investors of all types finally got some relief after a pretty brutal December and a weak start to 2025. It came in the form of cooler than expected inflation data. We got the producer price index for December (PPI) on Tuesday and the consumer price index (CPI) on Wednesday. Both numbers were below expectations and resulted in bond yields FINALLY dropping. The rally in bond prices (bond prices typically move opposite to yields) continued today. This has boosted dividend payers and other interest rate sensitive assets. Commodities bounced as well in response to the U.S. Dollar taking a much-needed break from its march higher. Lastly, real estate benefited based on hopes that we are not looking at even higher rates in the coming months. Suffice to say, this has been a good week for all assets and that makes us happy at Cabana. We also are seeing some rotation into sectors beyond technology. In my view, that is healthy.  

We are starting earnings season and stocks are priced for strong growth. The forecasts for the coming year will be closely watched. Hopefully the selloff we have seen over the past six weeks will suffice for the time being and we don’t need the broad indices (QQQ, SPY and DIA) to test lower levels. Let’s not forget that earnings drive price and the rising interest rates that we have seen make earnings more difficult. I think we can expect some volatility as companies address this issue over the next few weeks. 

Lastly, investors are waiting to see what incoming President Trump does following his inauguration. There is a hope that he is only “negotiating” when he says he is going to slap tariffs on trading partners and will deport millions of illegal immigrants currently employed in the construction, agriculture and manufacturing industries. All of which is perceived to be inflationary… which means higher interest rates. We shall soon know the answer. 

At Cabana, we remain in our Cautiously Bullish Scene. 

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq