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BCA Weekly Commentary 7/29/23: A Shift to Cyclicals


ECONOMIC IMPACT. It has been over 2 months ago since our last newsletter. Things economically as well as market wise have played out so far as planned. Inflation is slowing but still elevated while growth (despite biased employment and GDP both inflated) has waned considerably. Most company reports indicate decelerating demand for goods and less so services heading into 2H23. Our assumption is these trends may continue as student loan payments resumes and interest rate hikes may yet to be fully felt while industry destocking continues to better balance inventories. The good news we believe the Fed is done raising rates, but may hold the steady for quite some time. This is especially true if govt data continues to show high employment and decent growth even though this does not match with what consumers are feeling and companies as experiencing.


INVESTMENT IMPACT. Our models are close to targeted levels of equity exposure with growth slightly underweight as we head into Fall which traditionally has not been good for returns. Going forward into 2024 we continue to expect cyclical companies to perform better as rate cut hopes rise as we move into 2024. However, we remain balanced in maintaining some growth exposure as well while the growth models contain equity positions that would not normally be in a growth portfolio due to their high dividends ie like medical REITS. As we head into 2024 we don't see much changing in the investing picture and since we are heading into Fall with what we think are elevated growth valuations we remain on the cautious side when adding new positions.



We remind investors that going forward expectations for returns for the overall market over the next decade remain low as we expect well below returns vs history. Be that it may we are hopeful our models can improve on that going forward.


Our model portfolio performance has been updated as of the date of this newsletter.


For more insights see our website and disclosures found there at BCA. The thoughts contained in this newsletters are intended lend insights into BCAs current & future thinking on changes to BCA model portfolios. They are not intended to be recommendations and should not be taken as such. As always contact us for further explanation of how these events can affect your finances. To unsubscribe from our newsletters & website please email us with "unsubscribe" in the subject.

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