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Stocks Closed Out a Solid Q1 and Bonds Continue to Struggle: Market Commentary from Cabana’s CEO – March 28, 2024 

8 months ago

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Stocks are closing the first quarter of 2024 on solid footing. Tech has continued to outperform, and high beta sectors have beaten low beta sectors. The last couple of weeks have seen some rotation, which may reflect that tech has gotten ahead of itself and there is some value (and less risk) in other places.  It also is likely evidence that some defense might come in handy going forward. 

Bonds have struggled so far in the face of yields rising precipitously from the end of the year. For reference, the 10-year Treasury Yield has jumped from 3.8% to 4.2% during the quarter. This continued bear market in bonds results from sticky inflation and some renewed fears that the Fed isn’t going to be able to cut rates. Last week, Chairman Powell said three rate cuts are still expected this year despite recent hot inflation data. The stock market liked the positive outlook and rallied. The bond market barely moved. This tells me the “smart money” isn’t so confident that rates are coming down. This likely plays into the theme outlined above and the need to be cautious here. 

We get the PCE inflation number for February tomorrow morning. This is the Fed’s preferred gauge, and we need an in-line report after recent data has been above expectations. If we get another hot data point, I think we will start to see a needed correction in stocks. We are due, and this would be a good reason in my view. Bonds prices will also likely fall. Tomorrow morning might be an important catalyst heading into the second quarter. Markets are closed for Good Friday, so we won’t know the full impact until Monday. Stay tuned. 

At Cabana, we remain in our Transitional Bullish Scene and are allocated accordingly across all portfolios.

Everybody, have a healthy and blessed Easter! 

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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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