2023 Q4 Economic and Market commentary

We’re a few weeks into fall and here in Minnesota it is finally starting to feel like it! In another few weeks we’ll set our clocks back an hour and say goodbye to the sun for a few months, or at least it feels like that sometimes. It’s an understatement to say that there’s a lot going on in the world right now and we want to reassure you that we are here and working hard for you.

During our last quarterly commentary, we talked about waning recession fears and economic resiliency, with tempered expectations for economic growth. For the most part, those trends have persisted – we’ve seen the consumer remain strong, unemployment remain low, and GDP growth continues to be stronger than anticipated. Our outlook hasn’t changed significantly since July which is a testament to the resiliency of the U.S. economy.

Yet, after a stronger than expected start to the markets in 2023, August and September brought us a bit of a correction. These are historically weak months for the stock market, and combined with interest rates spiking, fears of a government shutdown, and the speaker of the house being ousted, it shouldn’t have come as too big of a surprise. October has brought us back a bit from the September dip and we expect that we’ll finish the year strong.

Now is not the time to take on excessive risk, nor is it the time to bury your head in the sand and ignore opportunity. For the reasons we’ve detailed above, we’re making a few changes this quarter to your portfolios. In fixed income, we’re continuing to extend duration and add quality. In equities, we’re leaning towards companies with strong balance sheets in small-cap and mid-cap and are slightly overweight growth in large-cap to capture exposure to the big tech companies that have been driving the market in 2023. Lastly, we’re eliminating our small position in
emerging markets to focus on developed markets that mitigate exposure to China where we see unnecessary risk.

As always, please reach out to your advisor or call our office with any questions at 952-852-1293.

The Team at Blue Heron Wealth Partners