Hope you are all doing well. The major U.S. stock indexes fell around 2%, recording their second weekly declines in a row. Investors worried about a potential slowdown in the pace of interest-rate cuts. It was the fourth negative week out of five for the S&P 500, which finished down more than 4% from a record high set on December 6. Tik Tok is set to be banned this week unless the Supreme Court intervenes. I have broken down this week’s update using the lyrics of the one most Tik Tok famous songs abcdefu by Gayle.

“I was tryin’ to be nice. But nothing’s getting through, so let me spell it out”
It’s hard to say anything nice about the bond market. Bonds are not a good investment. Bond prices are under pressure again because prices move in the opposite direction of interest rates. In the wake of Friday’s stronger-than-expected jobs report, the yield of the 10-year U.S. Treasury note surged to the highest level in more than 14 months. It got as high as 4.79% on Friday morning before closing around 4.77%. The recent spike reflects growing market expectations that The Federal Reserve may only approve a single rate cut this year. I continue to advise holding little to no bonds funds in your portfolios.
“Now you’re textin’ all my friends asking questions. They never even liked you in the first place.”
President Trump has been texting about Canada this week and not sure that Trudeau ever really liked Trump in the first place. The two leaders exchanged barbs on social media and while it seems Canada is not ready to become the 51st US state, they are ready to move on from their Prime Minister. Trudeau announced his resignation this week and halted Parliament operations through March 24. Overall, history has shown us that political headlines alone do not drive markets. Instead, financial markets take cues from fundamentals, including economic and earnings growth and central-bank policy. The economic and labor-market fundamentals in the U.S. and Canada for that matter remain quite strong. With Trump in office there will be political headlines generated almost every day. It is critical to drown out the noise and focus on the fundamentals. We are likely going to experience larger swings in the market from day to day but the overall direction should still be positive. The chart below illustrates that markets have the ability to perform well under any President as long as the underlying fundamentals are solid. Which at this moment they are.

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