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CIO Thoughts: The S&P 500 Is Up 34% Since October 27. Now What?

  • The Fed pivoted and acknowledged that rate cuts were on the horizon for 2024.

  • The average stock had a valuation that made the risk/reward favorable in our view.

  • Market sentiment was poor. Recall that “T-bill and Chill” was the mantra for most of 2023.

However, there has been a material change in several of the above-mentioned areas, coupled with a growth slowdown. Therefore, our ETF portfolios required some tweaking.

What has changed as of June 2024?

  • Market cap-weighted index valuations have richened considerably.

  • Inflation has been stubborn (the Fed has not been able to cut despite 7-8 cuts priced into markets at the start of 2024).

  • Economic data has softened.

  • Market breadth has been quite weak. See the chart below from MS.

Source: Bloomberg, Morgan Stanley Research

Data as of May 31, 2024. Source: S&P Dow Jones Indices.

Source: Bloomberg. @Mayhem4Markets

  • Front-end rates have been anchored, making equity risk premiums the worst in 20 years. In short, “T-bill and Chill” remains the mantra.

  • Many advisors are comfortable hiding in T-bills and nibbling on AI stocks, semiconductors, and other growth cohorts. This has made it painful for broader market participation.

  • We recently added growth stocks to our portfolio to hedge the risk that economic growth will continue to materially weaken. The analogy is that large-cap bellwether stocks are able to grow their earnings and profits regardless of the macro environment, interest rate, or credit cycle.


  • Rather than trying to determine when the Fed’s next cut will be, advisors should focus on the big picture and build a portfolio that can weather the storm.  Astoria prefers to stick with high quality stocks and a globally diversified multi-asset portfolio.  Markets never go up in a straight line, and bull markets last longer than one can imagine.

  • Lastly, if you haven’t seen details of Astoria’s Inaugural Macro Summit hosted at the Nasdaq MarketSite, visit astoriaadvisors.com/macro-summit.  We have a high-caliber lineup of speakers.


John Davi

For more news, information, and analysis, visit the ETF Strategist Channel.

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