by Jared Plotz, Director of Research

It was a chilly morning to return to the office after hunkering down inside for Thanksgiving dinner and some football yesterday. But while the wind chill here in Minneapolis makes it feel close to zero degrees, the markets remain warm. Equities drifted higher during this holiday-shortened trading week. The S&P 500 and the Nasdaq both rose by +1.1%. Likewise on the fixed income front, falling interest rates – the 10-Year Treasury fell -22 bps to 4.19%  – boosted security values on the week and for the month. This caps off what has been the best month of the year for the major equity indices. During November, the S&P 500 increased +5.7% and the Nasdaq +6.2%.

Turning to the economy, completed new home sales declined worse than expected in October, but pending home sales were on the rise. This type of dynamic has not been uncommon amidst a period of bouncing interest rates. Durable goods orders were a touch light, while personal consumption expenditures (the Fed’s preferred inflation gauge) rose by 2.3% y/y, up from a 2.1% rate in September. The early read on holiday retail sales has been positive. Data from Salesforce showed that online sales growth was tracking at a faster pace this year than last. And Adobe Analytics reported an 8.8% rise in Thanksgiving-Day shopping versus a year ago. We should have a more robust read of the start to the holiday season by next Friday.

Tariffs were the big story this week after the incoming presidential administration suggested they will impose an additional 10% tariff on goods from China and 25% tariffs on Mexico and Canada next year. It is unclear whether such tariffs would violate current trade agreements between the countries. However, concerns related to the tariff headlines began easing on Wednesday after the incoming administration held conversations with leaders from Canada & Mexico. The investment community largely interpreted the announcements as hardline negotiating rhetoric.

Next week brings more manufacturing data early in the week and the big employment report for November on Friday. The latter could be a deciding factor of whether, or by how much, the Federal Reserve will cut their benchmark rate when they meet the week before Christmas. Currently, investors expect another 25 bps (quarter-point) reduction. We hope your Thanksgiving included time with some of the people that matter most. Have a nice weekend!

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.

by Jared Plotz, Director of Research

Major equity indices returned to growth this week. The S&P 500 rose +1.68%, while the Nasdaq climbed +1.73%. Industries that outperformed the broader move included energy, financials, and real estate, while laggards included healthcare, airlines, and some parts of both retail and technology. The 10-Year Treasury, a rate indicator, closed the week at 4.41%, down -3 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +2 bps at 4.49%. On the economic side, November manufacturing showed rising optimism and a pickup in hiring, while October housing starts slowed slightly due to the recent pick up in interest rates.

Walmart and Lowe’s provided a somewhat upbeat picture of consumer spending this week, while locally-based Target hit a rough patch. Walmart sales grew at a quicker pace than anticipated, jumping 5% from a year ago, partly driven by market share gains amongst mid- and upper-income groups. Meanwhile Target saw sales growth of just 1%, noting customers traded down to value brands and lower price points. Lowe’s sales had been declining, but the pace of decline narrowed as “do-it-for-me” professional sales, along with margins, continue to be robust within home improvement. A decline in interest rates would help Lowe’s by enabling customers to take on higher-expense projects via financing. Overall, these results reinforce the recent trend of consumers returning to a more normal (slower) level of spending while being more cost-conscious.

On Wednesday, Nvidia reported over 90% sales growth and 100% profit growth versus a year ago, exceeding expectations. Demand for their next-generation Blackwell chips far outpaces capacity over the next 12 months. Management noted they are already shipping more Blackwell units than anticipated, contrary to market chatter that suggested overheating of chips may have delayed the rollout. Guidance for the next quarter implies growth of 70%, but the stock reaction to the quarter was muted (ending the week unchanged) given a high bar of a “beat and raise” quarter.

Next week brings several notable data releases, such as October new home sales and pending home sales, durable goods orders, and personal consumption expenditures (an inflation gauge). A few S&P 500 companies will report earnings, including Dell, Hewlett Packard, and Best Buy. Our office will be closed on Thursday for the Thanksgiving Day holiday, and will be open until noon on Friday. We wish everyone a wonderful Thanksgiving!

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.

by Jared Plotz, Director of Research

Markets took a breather this week following the post-election rally last week. The S&P 500 fell -2.1%, while the Nasdaq fell -3.2%. The 10-Year Treasury, a rate indicator, closed the week at 4.44%, up +14 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +3 bps at 4.47%. The rise in rates pressured fixed income securities back to pre-election levels.

Part of the rise in interest rates can be attributed to this week’s inflation readings. While the consumer index (CPI) rose +2.6%, in line with expectations, the producer index (PPI) rose +2.4%, a greater-than-expected uptick. Economists have thus increased their forecasts for the Fed’s preferred inflation gauge (PCE), to be released at the end of the month. Also, Fed Chair Powell recently stated that despite “moving to a more neutral setting over time… the economy is not sending any signals that we need to be in a hurry to lower rates.” As always, time will tell what pace and magnitude the committee ultimately takes, but we remain of the view that the Fed is biased towards “easing” and has plenty of room to go.

Quarterly earnings season will soon come to a close. With 85% of S&P 500 companies having already reported, aggregate revenues have risen +5% from a year ago, while earnings have risen +7%. This week brought positive results from Block (Square) and Disney. Next week will bring reports from Walmart (Tuesday), Lowe’s (Tuesday), Nvidia (Wednesday evening), and Intuit (Thursday evening). Next week also includes data releases of October housing starts and preliminary November manufacturing activity.

Lastly, a firm update: we are delighted to announce that Nat Beebe has been elected President of Ulland Investment Advisors. Jim Ulland is taking a medical leave, although he will still serve as CEO and Chairman of the company. We hope for his speedy return. Since I have been co-managing the equities side of portfolios with Jim for a number of years, client portfolios will still be managed under a watchful eye during Jim’s recovery.

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.

by Jared Plotz, Director of Research

Election day has come and gone; the Federal Reserve executed their widely expected quarter-point rate cut; and stocks have taken off. The end of election uncertainty increased risk appetite and allowed buyers to return to the markets – after many participants had reduced exposures at the end of last month. The S&P 500 ended the week up +4.7% and the Nasdaq +5.7%, while the 10-Year Treasury fell -8 bps to 4.30%. Although a lot has happened of late, we will keep this week’s remarks brief given our quarterly client update will hit the presses next week. On Monday the S&P 500 was down -0.3%, Tuesday +1.2%, Wednesday +2.5%, Thursday +0.7%, and Friday +0.4%.

In economic news, the services sector of the economy showed improvement in October. Weekly unemployment filings were steady, and consumer sentiment appears back on the rise. On Wednesday, the Federal Reserve cut its benchmark rate by 25 bps (0.25%) to a range of 4.50-4.75% in a unanimous vote. This encouraged Preferred securities to move higher. Another quarter-point cut is expected in December.

Equity portfolio holding Axon – which not only manufactures Tasers and body cameras, but is also the “digital librarian” for thousands of public safety departments – reported strong quarterly results this week. Sales grew 32% from a year ago, while profits were up 42%. Both metrics were better than expected and the company raised its guidance for the full year. Management noted major deals signed with the Department of Homeland Security, the IRS, and Amtrak. The stock rose over 28% on Friday. Also this week, portfolio holding Nvidia rose 9% after being selected to replace Intel as the sole chipmaker in the Dow Jones Industrial Average index. We remain positive on the fundamentals of their business, and it remains one of our largest equity holdings.

Next week we salute our Veterans on Monday. Federal Offices and bond markets will be closed, but our office and the equity markets will be open. Tuesday will return to normal. Another week of quarterly earnings brings reports from the likes of Home Depot, Cisco, Hewlett Packard, and Disney. It will be the last heavy week of releases, after which earnings will trickle with Lowe’s on the 19^th and Nvidia on the 21^st. Economic releases will include October’s inflation readings of CPI & PPI mid-week, with retail sales and a few manufacturing data points on Friday.

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.