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Market Commentary – April 2024

Broader is Better

Equity markets ascended to record highs in the first quarter. Progress was broadly based, with most sectors rising, unlike 2023 when the market gain was dominated by a small cohort of technology stocks. This wider contribution is encouraging, because overly concentrated performance has often preceded stock market declines. The strength of the economy has been a pleasant surprise, and we have seen a nascent upturn in leading economic indicators.

Exceeding Expectations

Economic growth has certainly been resilient over the last year, defying the concerns of most forecasters. It is remarkable that the economy has weathered a historically significant period of Fed policy tightening with barely a slowdown in progress.  Fiscal policy has certainly contributed to this performance, with stimulation from high government spending offsetting the impact of higher interest rates.

We remember a time when critics of supply-side economics lamented the “Reagan deficits” in the 1980s. Just a decade later, President Clinton grappled with higher interest rates demanded by “bond market vigilantes” early in his tenure when budget deficits were high. These days a “deficit hawk” is an endangered species in Washington, even though government borrowing is chronically high and at levels usually associated with deep recessions or world wars. We do believe fiscal imbalances will need to be corrected over time. Bartlett does not anticipate severe austerity, but necessary reforms in tax and spending policies will eventually impact the outlook for economic growth.  This issue may increase in importance in 2025, after the election, regardless of the political outcome.

Not so Fast

Like impatient kids on a vacation drive, Wall Street forecasters are clamoring for a Fed pivot to lower interest rates. Indeed, predicting the timing and scale of interest rate cuts seems like a parlor game these days. Tune in to CNBC any time of day for the latest contestants.

From where they sit in the front seat, Dad and Mom know the dangers of faster driving. The Fed should be similarly mindful of risks created by cutting interest rates too much and too soon. The economy is at full employment, stock market performance has been strong, and inflation is still above the long-term target. Bartlett thinks moving too quickly to lower rates would be analogous to medicating an individual who isn’t sick. Better to save accommodative policy for when it is needed. Our more careful outlook is impacting how we structure your investments.

Creative Destruction

The late economist Joseph Schumpeter memorably described economic progress as the result of “creative destruction.” Driven by innovation, established processes get replaced by improved methods of production and distribution. Among many historical examples we recall railroads revolutionizing shipping, the internet disrupting newspapers and television, and mobile phones rendering landlines obsolete. 

Generative artificial intelligence is the latest example of disruptive technological change. This form of artificial intelligence (AI) allows computers to produce content almost indistinguishable from human output. Applications range from automation of administrative and service tasks to rapid interpretation of data in research and diagnostic processes. We think most industries and companies will be affected; AI will be a new growth opportunity for some companies and an existential threat for others. The overall economic impact should be positive, given the potential for higher productivity. We will do our best to assure your investments are on the right side of this very important evolution.

Built to Last

Bartlett’s foremost goal is to produce durable investment results, helping clients enjoy the long-term rewards that accrue to disciplined investors. Our formula is a combination of thoughtful and proactive financial planning, careful asset allocation, and investments based on quality and reasonable valuation. While pleased by continuing improvement this year, we are certainly not complacent. Stock valuations are now somewhat high relative to earnings and interest rates, which makes rebalancing asset allocation a worthwhile adjustment.  We are always mindful of risk and want to be sure occasional setbacks will not disrupt long-term financial plans. We never forget that wealth management is a marathon, not a sprint.

Concluding Comments

The firm welcomed many new clients during the first quarter, an achievement made possible by your referrals of friends, family, and associates. We are very grateful for your trust and loyalty. Your confidence is an honor we cherish, and we will work hard to maintain it.


This material provided by Bartlett Wealth Management (“Bartlett”) is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Past performance is not a guarantee of future results. Opinions expressed by Bartlett are based on economic or market conditions at the time this material was written; actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from sources believed to be reliable.  Bartlett, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Any reference to an index is included for illustrative purposes only.  Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products.

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Contact a member of the Bartlett team today.