CAISSA’s December Perspectives
Each month, CAISSA performs an analysis of prevailing global events, assessing their potential influence on our client’s wealth plan. We are diligently having strategic discussions with our portfolio managers, ensuring that our position remains informed and aligned with current market dynamics.
Below you will find CAISSA’s perspective on these global events.
Black Friday & Cyber Monday Retail Sales
Black Friday saw robust results as consumers spent a record $9.8 billion on online purchases, marking a 7.5% Year over Year increase, with a significant portion of sales conducted through mobile devices, accounting for 54% of online sales.
CAISSA View: Consumers have surprised markets with their resilience, despite the tightened financial conditions. We believe this strong economic backdrop may allow the Federal Reserve to keep interest rates higher for longer, while also making the odds of seeing a deep recession unlikely.
Israel War — Hostage Exchange & Ceasefire
In a positive turn, a temporary ceasefire was reached between Israel and Hamas. This allowed for humanitarian efforts to safely get aid into Gaza and facilitated a large hostage exchange.
CAISSA View: While the conflict between Israel and Hamas remains a humanitarian crisis, as investors we are forced to consider the investment impact. Recent de-escalations, including hostage exchanges and temporary ceasefires have been constructive. Unless the U.S. or Iran get directly involved, we believe that the impact on financial markets can remain subdued.
Small-Caps Up Over 5% in a Single Day
On November 14th, the stock market experienced significant gains as treasury yields crashed following a softer than expected inflation print. While the S&P 500 was up 1.9% on the day, Small-Cap stocks, as measured by the Russell 2000 Index, saw a single day gain of 5.48%.
CAISSA View: This shows the power of diversification and why we choose to remain long-term investors and don’t try to time markets. U.S. Small-Cap stocks have been trading at favorable valuation discounts to the Large-Cap peers and we have been bullish on them with an overweight to the asset class. While they have been a laggard to U.S. Large-Cap year-to-date, we would rather be early than late. The 5.48% move shows how quickly market leadership can change.