Click here for the PDF: The Weekly Beacon December 22 2023

We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.

Feel free to send in your pictures of lighthouses to be featured in our weekly commentary.

This weeks issue: FED pivot, The FED, Jerome Powell, Interest rates, Inflation, U.S. election, S&P 500 performance 2023, Housing demand, GDP per capita in Canada, GDP per capita in the U.S., U.S. housing market, Housing demand in Canada, Housing deficits, Stagnant economy, Dow Jones performance, Stock buying participation, Red Sea blockage, Shipping back log, Houthi rebels, Supply chain back log, Cost push inflation.

The FED’s pivot

We commented on the FED’s last interest rate decision and Chairman Powell’s press conference in last week’s edition of this publication. However, there were a few things that we wanted to go over a week later.

The announcement was very much a dovish pause. The FED currently is forecasting the FED funds rate to hit 4.6% by the end of 2024. This is a 0.5% change from September’s release by the FED.

The market interpreted this even more dovish than the FED as market expectations are forecasting the FED funds rate to be 4.0% by the end of 2024. Currently, the FED’s benchmark rate sits at 5.25-5.5%.

Market participants are forecasting a 68.9% probability that the FED will cut rates at its March announcement. Numerous firms have also forecasted the same cut.

We think inflation could continue to be sticky and rate cuts will not be as aggressive as many market participants believe. The obvious thing that would make us wrong would be a recession in the U.S. which would certainly result in interest rate cuts. We think the pending election could also impact the FED’s policy – even though they are supposed to be a non-political institution.

Speaking of 2024’s election, here are the live odds of who will win the presidential election in November.


Click here for the PDF: The Weekly Beacon December 22 2023