by Jared Plotz, Director of Research

Equity markets bounced higher on Friday, concluding another volatile week that saw the S&P 500 end Thursday in correction territory (i.e. down >10% from its recent peak, in February). We anticipate the first half of 2025 to exhibit greater volatility than seen the last couple years and we continue to make portfolio changes that we think will be beneficial in a choppier environment. We have highlighted to clients during portfolio reviews that a 10% intra-year correction is not uncommon, and is in fact normal. The S&P 500 declined -2.3% this week, while the Nasdaq slid -2.4%. Year to date, the S&P 500 is down a little over 4%.

The 10-Year Treasury yield, an interest rate indicator, closed at 4.32%, rising +1 bp from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended unchanged at 4.24%. As some concerns have surfaced regarding GDP growth and consumer spending amidst economic unknowns, fixed income markets have begun assuming additional Fed rate cuts down the line. Such cuts to short-term rates typically benefit fixed income securities.

US economic data was soft this week. Small business optimism fell in February, though it remains above average. Consumer (CPI) and producer (PPI) inflation rates for February both slowed slightly versus January. And consumer sentiment (as measured by the University of Michigan) fell to 57.9 from 64.0 the prior month, with “uncertainty” noted as on the rise.

Uncertainty seems to be the key word of this past month. This earnings season, over half of the S&P 500 companies mentioned tariffs on their conference calls. The war in Ukraine continues, with hopes for a ceasefire seesawing this week. And the US Senate negotiated into the final possible day on a continuing resolution for federal spending that would avoid a government shutdown – a deal that is expected to be reached by midnight.

Looking ahead to Monday next week, retail sales for February will be reported by the Census Bureau. These figures could provide a glimpse of any early impacts from the drop in consumer confidence in recent weeks. On Wednesday, the Federal Reserve will host a press conference following the conclusion of their two-day policy meeting. No change to benchmark rates is expected, but investors will listen for changes to the medium-term outlook. We will also get a slew of housing data points for February next week, including the NAHB Housing Market Index, building permits, housing starts, and existing home sales. Coincidentally, earnings metrics and commentary from home builders Lennar and D.R. Horton are on the docket. In light of the pending tariff hikes on Canadian lumber, executives may share cautious outlooks.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. 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 at www.ullandinvestment.com or 612.312.1400.

by Jared Plotz, Director of Research

Trade uncertainty continues to roil the markets, acting as an overhang on the economy. New tariffs on key US trade partners did in fact go into effect on Tuesday, but by Thursday the administration had granted a one-month reprieve to Mexico and Canada for USMCA-compliant goods and services, including automobiles and agricultural products. Currently, around half of imports from these countries are compliant, though Mexico aims to boost compliance to 85-90% in coming weeks.

While the tariff postponement for goods that fall under USMCA (the US-Mexico-Canada agreement that replaced NAFTA in 2020) provides some immediate relief, it appears the daily jockeying is taking a toll. Business activity, and various corporate commentaries, suggests an increasingly cautious “wait and see” approach to orders and capital spending. Investor, consumer, and corporate sentiment have all softened to varying degrees. A major question is whether such jockeying is merely a negotiating tactic or more permanent trade policy. It may be a bit of both. More and more, it appears the administration is willing to inject some short-term pain on the inflation front to achieve its long-term economic goals.

We would note consumer spending remains generally healthy (in fact, Costco said quarterly sales grew 9% y/y, including in February), despite recent weakening in sentiment and pressures within some cohorts. Any slowing on the corporate side is also coming off robust levels. If the overhang can lift over the coming two quarters, and as the trade picture becomes clearer, spending and investments should accelerate. In the meantime, volatility may remain high. The S&P 500 declined -3.1% this week, while the Nasdaq slid -3.5%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.31%, rising +9 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -3 bps at 4.24%.

Manufacturing activity remained in expansion territory in February (but was down from January levels), while the pace of services activity picked up sequentially. Friday’s jobs report wasn’t a big needle mover; the 151,000 jobs added in February and the 4.1% unemployment rate were better than feared. Broadcom’s stock jumped on Friday, with management highlighting upside within AI networking products and noting two new AI customers. Meanwhile, CrowdStrike’s stock fell Wednesday due to disappointing first-quarter guidance, overshadowing a beat of fourth-quarter expectations.

Next week brings a string of important economic data points. On Tuesday, the NFIB Small Business Index for February will be released, as will job openings (JOLTS) for January. CPI inflation for February will come on Wednesday, with PPI inflation on Thursday. Both rates of inflation growth are expected to tick 10 bps lower sequentially. On the corporate front, Oracle and Adobe are among the larger companies reporting quarterly results, and they should provide some color on AI developments in software.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. 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 at www.ullandinvestment.com or 612.312.1400.

by Jared Plotz, Director of Research

Equity markets have been more jittery the past two weeks. Some factors contributing to this dynamic have been a string of softer economic data, continued uncertainty in trade policy, and concerns over impacts of fiscal spending cuts. The S&P 500 declined -1.0% this week, while the Nasdaq slid -3.5%. Meanwhile, the 10-Year Treasury yield, an interest rate indicator, closed at 4.22%, down -21 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -7 bps at 4.27%. This decline in interest rates boosted the values of fixed income securities.

Economic data disappointed this week. Consumer confidence notably dropped, with inflation worries increasing. New and existing home sales were weaker, as were housing starts. And weekly new unemployment filings jumped more than expected. While these moves are coming from healthy levels, businesses and consumers may be signaling an intention to wait for more clarity on federal developments. It remains to be seen whether tariffs on Canada and Mexico will go into effect on March 4 or April 2. Tariffs on European countries may also follow.

A number of equity portfolio holdings announced Q4 results this week. Overall, trends were very positive, although stock reactions were mixed. Nvidia said sales grew 78% versus a year ago and guided 62-68% y/y growth for the next quarter. Profit margins on those sales are a bit lower as the company ramps up production of its new Blackwell products. The CEO said he’s observed no slowdown in capital spending from large clients, a concern amongst investors after rumors swirled that Microsoft had canceled some data center leases. Nvidia’s optimism was more consistent with Apple’s announcement that they would invest $500 billion over the next four years in the US (and hire 20,000 new workers in R&D and AI).

Axon and Intuit also reported, and both saw their stocks jump. Axon reported sales up 33% and suggested they don’t expect to see a material impact from potential federal and state spending cuts. Meanwhile, Intuit highlighted a strong start to tax season.

Next week brings earnings reports from Broadcom, Costco, and CrowdStrike, among others. We will see if any new tariffs take effect. And the most impactful economic release will be the February jobs report on Friday.

In exciting news this week, Ulland was informed that our Fixed Income (Intelligent Fixed Income) and Equity (Intelligent Blend) Strategies both landed in the latest Broadridge Top 40 Money Managers Rankings for the period ending 12/31/24.

Ulland’s Intelligent Fixed Income landed #1 in the U.S. Fixed Income (All Styles) category out of 1,132 strategies, +19.19% net of fees for calendar year 2024. Ulland’s Intelligent Blend finished #14 in the U.S. Diversified/Multi-cap Strategy category out of 273 strategies, +34.19% net of fees for calendar year 2024.

We thank our clients for the trust placed in our management and look forward to navigating portfolios in 2025. Please see the bottom of this post for a complete list of the rankings and disclosures.

Q4 2024 U.S. Fixed Income (All Styles) 4Q Rankings

Q4 2024 U.S. Diversified Multi-cap Equity 4Q Rankings

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Broadridge Top 40 Money Managers Rankings Disclosure:

No compensation has been provided directly or indirectly by Ulland Investment Advisors, LLC in connection with obtaining or using the third-party rating.

Best Money Managers is a comprehensive survey of institutional money managers’ performance. All rankings in this publication have met the following requirements:

• Performance must be calculated “net” of all fees and brokerage commissions. This means after all fees and commissions have been deducted;
• Performance must be calculated inclusive of all cash reserves;
• Performance results must be calculated in U.S. dollars, that is, from the perspective of a U.S.-based investor;
• Performance results must be calculated on an asset base which is at least $10 million in size for “traditional” U.S. asset classes (equity, fixed income, balanced accounts) or at least $1 million in the case of international and “alternative” U.S. asset classes;
• The classification of the product must fall into one of the categories, which we rank. We only publish rankings for categories/time period combinations for which we have at least 20 contenders.
• Best Money Managers is published quarterly. While Best Money Managers acts only in a reporting capacity, every effort has been made to ensure the accuracy of the information.

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The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes. 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 at www.ullandinvestment.com or 612.312.1400.

From the UIA Team

Following a Thanksgiving week filled with family time for many, it is with heavy hearts that we share the sad news of our founder Jim Ulland’s passing. We would first and foremost like to send our thoughts and prayers to the Ulland family, including his wife Kris, and his children Olivia (Farris Hussain) Argañaraz and Matias (Hayley Jones) Argañaraz. Thank you for sharing your amazing husband and father all these years. We are eternally grateful and blessed to have had Jim in our lives. As we mourn Jim, we wanted to use our medium this week as a tribute to him.

Born in Duluth, Jim received degrees from Carleton College and the University of Pennsylvania’s Wharton School of Finance before starting an extensive political, educational, and business career – oh, and don’t forget Christmas tree farmer.

By the time Jim founded Ulland Investment Advisors (UIA) in 1997, he had already served as Minority Leader of the Minnesota Senate, a college professor, a senior leader at large banks and investment firms, and as Minnesota’s Commissioner of Commerce. Elected to the State House at the ripe age of 27, everyone knew Jim was destined for big things right out of the gate. His gift of finding common ground and instantly connecting with individuals extended into the investment world. Simply put, people have always been drawn to Jim Ulland.

Jim loved to invest in companies exhibiting strong growth, especially at reasonable prices. He sought those with innovative technologies, disrupting legacy industries. His most recent favorite, Nvidia – which he routinely mentioned in this newsletter – is a perfect example of Jim’s ability to catch a trend early and ride the winner. Jim’s investment style not only proved fruitful for clients over many a bull market, but his resolve and calm served as a sea anchor in the winds, holding strong in the bear market storms. Jim was always steady at the helm, no surprise given his Coast Guard service, which he often enjoyed sharing over a Minneapolis Club lunch (don’t forget the side of Durkee’s mustard and just a splash of coffee). Internally, he always led with a calm and steady hand. Control what you can control, and focus on the longer term. Jim always had an optimistic view on the market and life, and an ability to transfer that to clients as well.

Ulland hits stride with money-management venture 30 Nov 1999, Tue Star Tribune (Minneapolis, Minnesota) Newspapers.com
Jim was passionate about Carleton College and his impact on generations of Carls is clear. Jim was always quick to mention that he was the hockey goalie at Carleton. During Jim’s freshman year, he was introduced to the team as a member of the world-famous Duluth East Greyhounds. What the team failed to know was that Jim was the team manager. No problem, Jim would rise up and lead the Knights in net. The pinnacle of his college hockey career was when the team defeated Wisconsin. As later recalled in a note by Captain Fred Bagley, the Knights were led by the “heroic” Jim Ulland in net, saving 40 shots on goal.

Jim’s love for Carleton led to a steady stream of interns to the firm, of whom all cut their teeth under his wing. In fact, all partners in the firm were at one time interns at UIA. From Wall Street to the NBA hardcourt, Jim has left his mark.

While there are too many investment lessons learned from Jim over the decades to mention, we will stand fast to the knowledge we have acquired under his tutelage. As we carry the UIA torch that Jim lit many years ago, we hope to embody his collaborative spirit, his passion for work, and his close connection to clients, as well as to forever remember the impact he had on the community. Clients can be reassured they remain in very good hands with the UIA team, but regrettably we will all miss the dashing smile of Jim Ulland.

Please forward this email to others who knew Jim, particularly those touched by the full life he lived. A celebration of life will be held in June, details of which we will share as we get closer. Jim’s obituary can be viewed here.

Jim always enjoyed watching the peregrine falcons from his desk at the IDS Center. We know that his spirit will be soaring high above us all as we remember the impact he made.

Thank you, Jim!

Ulland Investment Advisors Team

Nat Beebe, President (18 years at UIA)

James Skjong, Dir. of Trading, Compliance & Operations (20 years at UIA)

Jared Plotz, Dir. of Research, Portfolio Manager (8 years at UIA)

Vini Crusius d’ Avila, Research Associate (3 years at UIA)

Sarah Stokes, Client Service Associate (3 years at UIA)