It’s your monthly 3 For 3!
 Its your monthly 3 For 3! March 25, 2024 March GOODNESS…its been a good month to climb higher. Spring has SPRUNG and I think Punxatawney Phil got it right…early Spring and GOOD markets have followed. Thrilled to report that ALL Alphavest models are beating benchmarks YTD—and with with most of the MAMA ANT’s (I’m tired of “Magnificent 7”) still running hot, beating benchmarks WHILE diversifying clients (think higher dividend yield + stable earners) from such concentration risks is no easy task. Thank GOODNESS for strong markets, AI and the power of TEAM! Enjoy this month’s commentary from Elizabeth Breaden, our new Chief Investment Officer/CIO. Some Spring Housekeeping: The office will be CLOSED 4/3-4/5. PLEASE TEXT us if you have an urgent need or wish to speak with me! 866-662-5247. Thank you (and to those ALREADY using our quick and easy texting)! April Lunch & Learn: 4/25/2024 NOON/Location TBD She GIVES Savvy: How to savvy up and destress annual charitable giving and grab a bigger tax break. Get a JUMP on year-end giving! Investing IN Women-Goat Yoga Round 2! Plus Panel Speakers TBA June 8th @BackBarn Bedaw Farms PS: Spread a little goodness this week…here’s a Good Friday blog from 2018 when travelling with a loved one in the BIG APPLE. It’s a timeless message from me to you. |
 My Name is…Neutral Greetings! Elizabeth here – Cokie graciously gave me the stand for this month’s 3 for 3. Little did I know as an undergraduate at Northwestern, in the mid 1990s, studying French and English language and literature, that literary analysis would turn out to be such a valued skill in deciphering and describing the language of financial markets and the Fed. Shakespeare famously wrote “what’s in a name? A rose by any other name would not smell as sweet,” and it has implications for the way we (markets, the Fed, individuals) attach specific attributes to a term such as neutral. We see a disconnect, the Fed continues to state that it will take three more cuts to reach “neutral” policy, but financial conditions do not seem to warrant it… |
| March 3 for 3: The “rude health” of the American economy When we met in Charleston in late January, we squared with the idea of a “no-landing” US economy – where, post-COVID reopening, sticky inflation persists, consumer spending stays elevated, and the oft-predicted recessions and soft landings fail to materialize. The Economist recently wrote: “America’s economy continues to defy expectations. At the start of this year, economists had been forecasting annualised growth in the first quarter of 1%; that prediction has since doubled. The labour market is in rude health, too. The unemployment rate has been below 4% for 25 consecutive months, the longest such spell in over 50 years. No wonder Uncle Sam is putting the rest of the world to shame. Since the end of 2019 the economy has grown by nearly 8% in real terms, more than twice as fast as the euro zone’s and ten times as quickly as Japan’s. Britain’s has barely grown at all.” Whatever you call it, today’s economy smells pretty sweet. Our view, that instead of a “soft” or “hard” landing, we might see “no landing,” continues to be validated by markets. We believe that the global economy has transitioned to an era of higher growth that is increasingly fueled by technological advances, favorable demographics and employment, and strong consumer demand:  The new neutral? March Madness is in full swing, and although Jay Powell/the Fed have mapped out their brackets on the path to neutral policy rates, the market seems to be doing a different kind of layup. Indeed, the global economy may be wondering why its referee, the Fed, isn’t counting its many slam dunks: The Global Economy: “It’s over! No landing! This is neutral!” The Fed: “Sorry, those are the rules. The economy is on sound footing and inflation is higher than expected, but regulation imposes that we raise rates until something breaks.” All the while, the spectators, or Mr. Market, happily cheer the Fed on, giddy at the prospect of cheaper money on the horizon. By the way, “neutral” is a theoretical level where interest rates neither stimulate nor restrain the economy, and the Fed usually arrives at this level by adding 0.5% to equilibrium inflation. So, 2.5 or 3.5-4%, depending on where inflation settles. A GOOD rule of thumb to assess current thinking is to look at where Fed Fund futures are predicted. And the dominant market belief, that “the Fed hikes too much and something breaks,” AKA the “soft landing” camp, would like to see the Fed cuts rates sooner rather than later. Even Bill Gross, the “bond king,” recently said that “real interest rates are simply too high.” What gives? If anything, rates since COVID were too low, and today’s rates are simply more in line with long term historical averages. The Fed has hiked swiftly, yes, but the economy sure doesn’t seem broken. Across the board – employment, housing, consumer spending, corporate earnings – we seem to be absorbing higher rates. This view has gained traction in Fed Funds futures and the strong equity markets we have seen since November. But the Fed continues to point to 3 cuts in 2024. If this happens, and the Fed has misjudged inflation, that could spell higher inflation and problems for markets down the road. Is this a case of “a rose by any other name?” Arguably, financial conditions do not warrant the Fed cutting rates at all this year: the market is already calling the win and circling the basket of the final game of 2024, which it expects to be a slam dunk in the monetary policy tournament whose endgame is neutral. Our view: get ready for a choppy market reaction should the Fed dial back current cutting expectations! (Think #3 seed Kentucky-esque upset by #14 Oakland (and congrats #11 NC State on their win Saturday over Oakland).  Harnessing AI? Advances in AI, or Artificial Intelligence, took capital markets by storm starting in mid 2023, with the release of ChatGPT 2.0, the AI-enabled large language model. Although global tech players have been investing in AI development for years, the technology is still in its infancy, and it has the potential to transform key facets of life as we know it, from health care to industrial production to biotech research to basic everyday productivity, and more! As investors, we weigh the AI opportunity not only in the context of global growth, interest rates, inflation, and geopolitical dynamics, but also from these angles: – What sectors benefit the most from AI? Technology is the obvious answer, but health care, basic industries, education biotechnology research are but a few examples of other sectors. – Which countries lead in developing AI technologies? The United States leads, between the likes of Microsoft and Google, each touting their own AI platforms. Other countries – think Taiwan, South Korea, the Netherlands and Israel – are home to significant players in the AI space, while others, such as Brazil, may be integrating AI more rapidly in mobile communications technology. – Which economies stand to benefit the most from AI development and deployment? Factors such as demographics, i.e., the youth and skill of the labor force, are key, of course (India), but so is a country’s ability to adopt AI, the ability of its workforce and population to adapt to new technologies, and factors such as regulation and a country’s legal and tax framework (the United States). With all of this in mind, we have launched a High Conviction Alpha “Sleeve” within the Alphavest 10 Year Core Equity Model, which we believe will allow us to achieve several objectives simultaneously: – Exposure to international growth drivers outside the US; – Capture AI-driven growth at the tech development, industry, and country levels, via positions in Taiwan Semiconductor (TSM, Taiwan), NU Holdings (NU, Brazil), and GE Health Care technologies (GEHC, US); – Initiate exposure to a high-conviction, high-growth market (PIN, India) The “High Conviction Alpha Sleeve” has returned +3.15% vs. -.12%/S&P500 since inception. It’s 25% of our Alphavest 10 Year Core Equity Model which is up +10.12% YTD vs. 9.48%/S&P500, and boasts a 2.05% yield. SEE BELOW:  Alphavest YTD winners and losers: Holdings update since February: The Alphavest Suite of portfolios/models has demanded a great deal of our attention since September 2023 and the time and talent has paid off! You’ll be shocked to hear we sold Apple and Microsoft in February, in lieu of alternate AI holdings like NXPI and some existing portfolio energy holdings like EOG resources and XOM and a new bank holding, Key Corp/KEY. With Apple down -7% since we sold and new bank and energy holdings up 11-12% over the same time period, so far so GOOD. |
 Winners & Losers March & YTD Portfolio Winners: |
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 March & YTD Portfolio Losers: All YTD losers are bond portfolio holdings (thanks to having sold Apple -10.52% YTD) |
  Holdings update since February: The Alphavest Suite of portfolios/models has demanded a great deal of our attention since September 2023 and the time and talent has paid off! You may be shocked to hear we sold Apple and Microsoft in February, in lieu of alternate AI holdings like NXPI, PIN and some existing portfolio energy holdings like EOG resources and XOM and a new bank holding, Key Corp/KEY. With Apple down -7% since we sold (and -10.52% YTD) and new bank and energy holdings up +11-12% over the same time period, so far so GOOD. SOLD: AAPl, MSFT, LOW, WST, ITW BOUGHT: ABBV, NU, PBR, PIN, TSM, GEHC, KEY, NXPI, AMGN INCREASED: EOG, XOM, MRK Want info on other stocks? Let us know! |
 From Cokie’s Lens: |
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