Date: March 22, 2024

Less Is More In 2024

The model for Fed day could not have been any more perfect. Stocks traded in a narrow range and then saw big moves in both directions before racing higher into the close as Jay Powell confirmed their forecast of interest rate cuts later in the year. Right now, I think he may eat some of those words as inflation remains stubbornly above their 2% target. Recall that I commented on Fox Business that 3% is the new 2% without recession.

Additionally, and perhaps more importantly, he floated the trial balloon that the Fed discussed tapering its monthly sale of assets from its balance sheet. Count me as a detractor. What else is new? I do not believe the Fed should taper. The balance sheet has gone from $900 billion in 2007 to $9 trillion in 2022. I think the Fed should forge ahead and get that balance sheet cut in half before the next recession where they may need it again. It’s insane that the supposed smartest bankers on earth are so cavalier with trillions of dollars. And you already know that I came into the year looking for much less Fed action than the masses did and I still believe less is more in 2024.

The stock market continues to behave very well, even better than I thought and I have been among the most positive for 18 months. The foundation remains very strong and solid which is why I do not see a full-fledged correction of 10%+ coming anytime soon. A pullback may be coming as I still see a March peak,  but it should be limited and buyable.

March Madness is here, my favorite time of the year, and it’s not just because the UCONN men and women have thrived in March although that is a fact. They don’t call UCONN the Basketball Capital of the World for nothing! I absolutely love watching college hoops. At the Big East last weekend, I watched all four games on Thursday, two on Friday and one on Saturday. My wife thinks I am crazy. After UCONN won the first game, she thought we could go eat or shop or grab drinks. I ended up watching the last game on Thursday by myself as everyone around my seat left too. While I have complained bitterly about Ma Nature since November, it looks like she will be dumping the fluffy white stuff in Vermont over the weekend. The calendar may say spring, but winter isn’t over just yet.

On Wednesday we bought PCY, EMB and more FREL. We sold some levered NDX. On Thursday we bought levered inverse S&P 500. We sold some levered NDX.


Paul Schatz, President, Heritage Capital