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Second Half 2024 and Beyond – What We Are Watching

We hope everyone had a good 4th of July! Being a dual citizen (Richard), I had two celebrations this week. Canada Day on July 1st and the United States Independence Day on July 4th. We celebrated with good friends on Mt. Lemmon seeing the Independence Day parade. One of the joys of this parade at elevation of 8,000 feet is the cooler weather, the unpredictable nature of a thunderstorm, and the flyover from the U.S. Air Force to start the parade at noon. Everyone takes their own chair and puts it beside the road, and a front row seat is had! The true feeling of a small-town Independence Day Parade. A couple photos of the parade are included at the bottom of this article.

Equity Market

Before we look to the future we should see where we have come from. For the first half of 2024, the S&P 500 was up 14.48%. The index posted 32 all-time intra-day highs (6th highest first half since 928) and crossed 5,000 points, a meaningful number to the press and we are not sure who else in our profession. While this sounds great, the advance was very uneven as the main drivers of this return were Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta, and Tesla. Sometimes called the Magnificent 7 (where is Yul Brenner?, sorry we couldn’t resist). Quite simply the S&P 500 Information Technology sector up 27.8%, the rest of the components put together, flat to down. 

Economic Cycle

The economy can be broadly categorized into three cycle stages:

  • Late Cycle, as in the economy is slipping into recession. We don’t think this is where the U.S. currently is.

  • Early Cycle, when fiscal policy and monetary policy pull the economy out of a recession. Definitely not now.

  • Mid Cycle, all the time in between. This is where we are now, in our opinion.

In a Mid Cycle environment, we expect corporate earnings from rising profit margins. This has lifted stock prices. We expect corporate earnings to continue their slow upward growth as companies are being very cautious regarding excess spending. The chart below demonstrates this conclusion.

Interest Rates

We have said previously the Federal Reserve (Fed) will be very slow to cut interest rates. The problem we see at RMH is that the Fed decision to focus on a 2% number for inflation, is an arbitrary number. The roots of the 2% inflation target can be traced back to New Zealand in 1989 when their central bank was instructed to establish a target (Michigan Journal of Economics).

In looking at the chart below, we can clearly see that we are well above the goal of 2% inflation. In fact, from 1958-present we have averaged 3.81%. So, is a 2% inflation target even realistic? Recent inflation numbers from the Fed have suggested we are in a slowing environment, however several of the component prices, mainly food, housing and energy are not coming down.

Election Year

Remember - the market is a discounting mechanism. It is constantly processing likely future outcomes and pricing those outcomes in. Trading in response to November results will be a late trade as the market will have already had that result priced in. News networks and social media benefit when their viewers and users are worried. Worry means more eyeballs and longer amounts of time spent watching and scrolling, which means more advertisement dollars and revenues for them. We remain prepared for potential volatility this fall and we expect emotional and panicked discourse from both sides. Emotions do not breed good investment decisions. We encourage everyone to remain steadfast, look at the long-term picture, and focus on what they can control.

And remember, the government is much bigger than the presidential position. One thing we find interesting is that nothing gets done in Washington even when one party controls all three branches of government. At some stage (and we hope much sooner than later) the parties will have to work together.



The U.S. economy seems to have two juxtaposing narratives right now. On one hand, there is stress over interest rates, inflation, and election volatility. On the other hand, the stock market is up, corporate earnings are up, wages are increasing, and unemployment is relatively low. The rate hikes have significantly impacted the people and companies who utilize leverage. On the other end of the spectrum, we have people and companies who own assets and have minimal leverage doing well. In fact, they can earn a higher yield on their excess cash than they’ve been able to in a long time. Financial well-being sentiment is largely variable across income groups.

We have the 3 same major questions for the latter half of the year that we had the first part of the year: 

·       When will the Fed cut rates?

·       How will the citizenship respond to the November election?

·       And will there be any geopolitical or black swan events?


At our core, we remain optimistic. However, we always center ourselves around the question, "What could go wrong?".


We thank you all for taking the time and reading “Market Watch.” It is meant as an educational piece on the always evolving markets. It is something we plan on providing every month, and your feedback is very important to us.


On a personal note, RMH is now in the position to bring in new clients so please be sure to share this informational letter with whomever you wish. RMH’s focus is on the customizable investment needs of individuals, families, and foundations. We enjoy working with our clients to better understand their goals, values, and passions for what is important in their lives. In expanding our client base, we look forward to working with people who share these same desires.


Richard Mundinger, CFA

Ashlyn Tucker, M. Fin, Analyst, CFA Level III Candidate



Sam Ro, CFA – 06/16/2024 6 Charts that help explain why stocks keep going up

DataTrek Community, STT: Second Half Outlook, June 27, 2024



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