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Archive for January, 2025

Weekly Market Update for January 31, 2025

by Jared Plotz, Director of Research

Major indices were choppy this week – beginning the week down due to a concern out of China before clawing the bulk of their way back. Then, late on Friday, concerns around tariffs turned stocks lower again. The S&P 500 declined -1.0% this week, while the Nasdaq fell -1.6%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.55%, down -7 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +2 bps at 4.30%.

Economic headlines didn’t provide much direction. The Federal Reserve left benchmark rates unchanged, and Chair Powell’s commentary was consistent with future decisions being data-dependent. The preliminary reading of Q4 real U.S. GDP was just a hair light of forecasts, suggesting the economy grew at a 2.3% annualized rate in Q4, down from 3.1% in Q3. Full-year 2024 looks to have grown by 2.8%, compared to 2.9% in 2023. Then on Friday the White House suggested new tariffs would begin on Saturday.

The biggest headline of the week was an open-source AI model released out of China, which pressured AI-linked equities in the US. The Chinese model boasts good performance, while claiming to consume less power by utilizing less-sophisticated Nvidia chips and a lower-cost training method. This particularly impacted Nvidia, though the stock has recovered off its low of the week. While it is too early to know how this may ultimately affect Nvidia and the broader space, it is possible cheaper models may lead to greater and faster AI adoption by enterprises.

Earnings reports from the big technology companies have kicked off. Meta Platforms (Facebook) posted a strong quarter to end 2024. Investors’ favorable view on the company’s AI investments allowed it to dodge the pullback seen in other AI names. Microsoft showed a deceleration in its cloud computing business, but said its AI revenues are growing strongly. Apple iPhone shipments disappointed given a decline in the greater China region; however, other products and its services business outperformed. Overall, there were no indications that data center spending would slow, but rather executives said they’d stick to large, planned increases over 2024 levels. Lastly, credit card companies exceeded expectations, noting that volumes accelerated in January – a sign that consumer spending remains resilient.

Next week brings quarterly results from Google (Tuesday afternoon) and Amazon (Thursday afternoon), as well as a myriad of other companies. Some manufacturing and construction data will be released on Monday, while the big employment report comes on Friday. Nonfarm payrolls are expected to have risen by 150,000 in January, after jumping by more than 250,000 in December. The wildfires in California and snowstorms in the South may impact the employment number.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for January 24, 2025

by Jared Plotz, Director of Research

Markets started the week off closed on Monday in observance of Martin Luther King Jr. Day. The holiday also happened to be shared this year by Inauguration Day, which the incoming administration used to sign a flurry of executive orders and to promote ongoing business and trade developments. Tariff chatter was softer at the margin, though negotiations on trade policy will likely remain dynamic in the coming weeks. The S&P 500 rose +1.7%, while the Nasdaq increased +1.6%. The 10-Year Treasury, an interest rate indicator, closed the week at 4.62%, unchanged from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -2 bps at 4.28%.

There was no clear direction from economic data points this week; however, CEO outlooks are becoming more optimistic as companies look to increase business investments. Prologis – one of the largest lessors of industrial warehouses – noted strong post-election leasing activity. Transportation companies noted higher railroad volumes and improving passenger airline demand.  Media company Netflix generated record new sign-ups and a large jump in advertising revenues. And financial services company Charles Schwab highlighted increasing account openings as well as trading activity. All of this suggests business and consumer confidence is robust.

This week, OpenAI (in which Microsoft holds a significant interest) launched Operator, an AI agent that can perform web browsing tasks autonomously. Microsoft had already revealed $80 billion in targeted AI spending. Additionally, portfolio company Meta (Facebook) shared that it plans to invest $60-65 billion in capital expenditures in 2025, up from about $38 billion last year. Then, coinciding with Inauguration Day, technology companies OpenAI, Oracle, and Softbank announced a JV partnership to fund an initial investment of $100 billion in AI infrastructure, and potentially as much as $500 billion over the next four years. On the back of this positive news for AI players, we have recently begun trimming some positions to manage rising individual equity weights in portfolios.

Looking ahead to next week, many of the big technology companies’ earnings are on tap. This includes the likes of Microsoft, Meta (Facebook), Tesla, Apple, and Amazon. These should provide a good look into advertising trends, as well as capital investments, particularly data center spending. The Federal Reserve meets on Wednesday. Though no change to benchmark rates is expected, Chairman Powell’s Q&A commentary could impact Treasury yields and Preferred securities. Then on Friday, the first reading of U.S. fourth-quarter GDP will be released. Economists are forecasting that the economy expanded by 2.3%, which would be the 11th consecutive quarter of real (inflation-adjusted) growth.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for January 17, 2025

by Jared Plotz, Director of Research

Just like that, the pendulum swings the other way. Equity and fixed income markets both moved higher this week as inflation readings came in cooler than expected. The start to fourth-quarter earnings reports was positive, as was news of a ceasefire deal in Gaza. The S&P 500 rose +2.9%, while the Nasdaq increased +2.5%. Major stock indices are now up year to date. The 10-Year Treasury, an interest rate indicator, closed the week at 4.62%, down -14 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, was largely unchanged.

This week brought key inflation readings for December. The Consumer Price Index (CPI) rose 3.2% from a year ago on a “Core” basis (ex-food/energy), a slower pace than expected and versus November. The producer equivalent (PPI) rose 3.5% on a similar basis. Meanwhile, retail sales for December rose 3.9% from a year ago, softer than economists forecasted. This suggests the economy and consumer spending, while solid, may not be overheating. The cooler inflation readings engendered a reprieve in interest rates along with more sanguine inflation commentary from Federal Reserve members. All of these signals aided Preferred securities.

The Big Banks kicked off the fourth-quarter reporting season with positive results this week. The group showed an improvement in interest margins and earnings, while noting strong investment banking and trading activity. The index comprising bank stocks rose 8% on the week.

Taiwan Semiconductor – not a portfolio holding, but the largest contract manufacturer of Nvidia’s advanced chips – jumped higher after laying out an expectation for its AI revenues to double this year and grow at a 40% clip over the coming five years. This is an encouraging sign for our AI positions, like Nvidia. Minnesota-based United Healthcare’s report showed profits above expectations. Though shares fell as investors remain concerned over the trend of higher healthcare costs, the company’s growth expectations remained consistent for 2025.

Next week, we, and the markets, will be closed on Monday in observance of Martin Luther King Jr. Day. Since the economic calendar will be light, corporate earnings will set the tone for the market. Many regional banks, as well as healthcare and transportation companies, are on the docket. An upbeat tone is likely.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

Weekly Market Update for January 10, 2025

by Jared Plotz, Director of Research

Markets, both equities and fixed income, moved lower this week. Fears of a resurgence of inflation were stoked by a hotter (i.e. stronger) jobs report in addition to rhetoric on tariffs and percolating concerns of a rising US fiscal deficit. The S&P 500 fell -1.9%, while the Nasdaq fell -2.3%. The 10-Year Treasury, an interest rate indicator, closed the week at 4.76%, up +16 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +2 bps at 4.30%.

Economic data was strong this week. One measure of business confidence reached an 18-month high and showed “new orders” for services expanding at the fastest pace in nearly three years. Job Openings (JOLTS) for December were higher than expected, with over eight million vacancies – a sign that businesses are looking to hire. Friday’s monthly employment report showed that the US added 256,000 jobs in December – 100,000 more than expected – while the unemployment rate ticked down to 4.1%. A stronger labor market is often viewed as one contributor to inflation and a reason for the Federal Reserve to be less aggressive lowering benchmark rates.

Speaking of the Federal Reserve, many members echoed an opinion this week that the inflation fight is not yet done. This is partly attributed to the most recent uptick in inflation readings and employment/wage growth. However, according to the group’s minutes from its last meeting, it also originates from the impacts of potential changes to government trade and immigration policy. The rise in interest rates this week was led by a combination of stronger economic data and a Fed that is less confident in the speed at which inflation will return to its 2% target.

In stock portfolio news, Nvidia CEO Jensen Huang confirmed that Blackwell systems (the firm’s newest chip line) are in full production and the company is seeing expanding use cases, including into robotics. Meanwhile, Microsoft announced they would spend $80 billion over the next year building AI-enabled datacenters. While we believe the AI wave still has a long runway ahead of it, we are actively considering trims to our AI position weights over the coming weeks to manage overall exposures.

Next week brings the start to fourth-quarter earnings reporting by companies. The big banks will give us the early look starting Wednesday. On Tuesday, the PPI inflation report for December will be released, with the CPI report out on Wednesday. Both will be watched closely to determine whether the recent uptick may be the start of a broader reacceleration in prices.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

 

Ulland Investment Advisors

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