Q1 “In The Books”

The end of the first quarter (Q1) brought news of back-to-back ‘winning’ quarters in equity markets, highlighted by the S&P up 10.26% and Russell 2000 up 4.81%. The quarter also witnessed bitcoin up over 70%, with the launch of the first bitcoin ETFs in the United States. Gold was up 8%, and WTI crude went up 16%. It seems gains were plentiful outside of bonds, which experienced slight retractions due to rate cut expectations becoming a tad more conservative than the dovish start to the year may have expected.

Perhaps most notably, last week, was the collapse of the Francis Scott Key Bridge in Baltimore, after being struck by the cargo ship DALI. The remains of the bridge have left the Baltimore harbor completely blocked, and the full economic impact of the tragedy is expected to take shape in the coming weeks with port operations ceasing for the foreseeable future. It is expected that the majority of the economic impact will be on the Baltimore economy, as the rest of the region will simply have to endure slightly higher cargo transport costs due to rerouting to other east coast ports in Pennsylvania and Virginia.

Weekly Performance

Data Source: Factset®        Performance Period:      3/25/2024    3/29/2024

Last week saw small cap equities outperform their larger counterparts. Big tech experienced some laggards, as Apple remains stuck in antitrust litigation and the brisk AI tailwinds are beginning to settle. In econometric news, last week was mostly quiet going into the Easter weekend. Friday did bring PCE, the Fed’s preferred measure of inflation print, which was just below expectations – the Core PCE Deflator1 came in at 0.26% and the headline PCE Deflator1 printed at 0.33%. Meanwhile, Personal Income1 growth came in below expectations at 0.3% and shows the race against inflation in still at Americans’ wallets. Durable Goods Orders1 beat expectations last week, up 1.4% in February, but consumer confidence dipped to 104.7 from 107.0.

As the quarter rolls over and we start Q2, we expect to see markets come to a reconciliation with the Fed, as expectations for a June rate cut will be in the rearview mirror before we know it. While we wait, it is worth reflecting on the fact that Q1 showed us that the markets can rally, even if tighter monetary policy is in store.
We hope that you had a joyous Easter celebration, and this first week of April brings you a renewed sense of purpose! “Praise be to the God and Father of our Lord Jesus Christ! In his great mercy he has given us new birth into a living hope through the resurrection of Jesus Christ from the dead” (1 Peter 1:3).

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