Market Commentary | December 19, 2023


Inflection Point

The Federal Reserve’s December 12th press conference bore a pale resemblance to a declaration of victory in its battle against inflation and marked a pivotal point in monetary policy. Quickly ensued a parade of pundits predicting when and by how much the Fed would cut interest rates and stocks went wild. 10Y Treasury yields accelerated their descent and today we see 3.91%.

In our portfolios, we saw new life breathed into the much-maligned interest rate-sensitive sectors (REITs, Utilities, Energy, Infrastructure). We also saw opportunities to reallocate assets for enhanced returns. Our placeholders, chosen to buffer the effects of inflation, higher interest rates, and the prospect of recession, have worked well in retaining relatively strong market valuations while paying outsized dividend yields.

Fortunately, issues do not all move in tandem so we can sell the appreciated, more fully valued positions and redeploy capital into the most beaten-down sectors. You may see new positions in housing, retail, energy producers, and infrastructure.

We appreciate your continued participation during the pandemic and through to the better time on the horizon.

We wish you Happy Holidays and an exceptionally good New Year!

Notes and Disclosure

Articles are provided for informational purposes only. They are not recommendations to buy or sell any security and are strictly the opinion of the writer. The information contained in these articles is impersonal and not tailored to the investment needs of any particular person. It does not constitute a recommendation that any particular security or strategy is suitable for a specific person.

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Commentary may contain forward-looking statements that are by definition uncertain. Actual results may differ materially from our forecasts or estimations, and 2MCAC and its affiliates cannot be held liable for the use of and reliance upon the opinions, estimates, forecasts, and findings in this article.

Past performance does not guarantee future results. Investing in publicly held securities is speculative and involves risk, including the possible loss of principal. Historical returns should not be used as the primary basis for investment decisions. Although the statements of fact and data in this report have been obtained from sources believed to be reliable, 2MCAC does not guarantee their accuracy and assumes no liability or responsibility for any omissions/errors.

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