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May Market Perspectives & WYNTK

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May 7, 2024

During the month of April, U.S. inflation drove markets nervousness up a notch with the S&P 500 ending five months of virtually uninterrupted ascent. Meanwhile, bonds continued their retreat as yields across the curve rose. Is a new edition of 2022 in the works? I think not. Rather this is the latest edition of the ongoing tug-of-war battle between economic data pertaining to persistently stubborn inflation and how it relates to the Federal Reserve’s next move on interest rates versus a resilient economy that continues to grow with strong corporate earnings, tight labour market and a consumer who is still spending battled on.

The underlying positive news is when we look under the hood of this persistent inflation, which is largely explained by services. It would be far more worrying if an overheated job market was still in evidence. However, it appears to be the opposite and in this month’s Market Perspectives I have some charts showing that the ‘goldilocks’ scenario where - although things are still good, they are showing signs of cooling. I believe this is a positive catalyst on the inflationary front moving forward and encouraging for investors.

Additionally, with a hint of pullback for the month I made sure to take a minute to help put ‘Volatility in Perspective’. With a close to 5% pullback we have data going back over the last 95 years to uncover how often mild corrections occur in a calendar year. Spoiler alert, its 3.4 times.

See attached and read on.

Despite the minor pullback in April, as ofFridays close the S&P 500 is still up around 7.5% YTD. What we felt inApril was a minor 5% correction which is perfectly normal to shake off the bullish train following back-to-back 10% quarter gains. Also, keep in mind that as I write this today, markets in general are a stone’s throw away from all-time highs that were set earlier this year.

Thanks for taking time out of your day to become a better-informed investor. In times of volatility, or when the journey becomes bumpy as it all too often does, you can be confident that you have an investment professional in your corner who is committed to your success every step along the way.

Happy Reading. AP

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