Dear Client, Partner, Prospective Client:
June 2023 finished with a bang and the 2nd quarter was one to remember. We mentioned in earlier letters that we figured 2023 would be a solid year expecting a 7-12% annual return, and we’ve surpassed that easily with our Core Equity position in the first six months. Big Tech has led the way with Apple, Amazon, Microsoft and Meta leading the way being up to the positive 40% or more. The Energy, Financial Services and Health Care sectors have disappointed, but we expect them to recover in due time as well. It is important to note the difference between an equal-weighted S&P 500 versus a one that’s based on market capitalization. The S&P 500 was up almost 15% in the first half of 2023 and an equal-weighted S&P 500 would be up only 2%. Something to remember as we have a lot of momentum heading into earnings season next week.
The Federal Reserve paused its rate hikes for the first time in this tightening cycle in June with promises to continue interest rate raises in July and August. They wanted to see more economic data before continuing their raises. I’m not sure what that says about their strategy, but inflation is coming down and the economy seems to be okay. The consumer spending report continues to support the willingness and resiliency of the consumer to spend.
Layoffs have continued with Ford, GM, Salesforce and many other Fortune 500 companies cutting costs to help their bottom line. The jobs report came in at 209,000 jobs created, which included government adding 60,000 jobs in this sector. Retail trade and transportation and warehousing lost about 18,000 jobs, so there are still some areas struggling. June unemployment came in at 3.6%, which was slightly less than May’s at 3.7%.
Geopolitical concerns continue with the Ukraine and Russia war as well as with our relationship with China. Janet Yellen did have some positive comments over the weekend after her trip over there so perhaps we are heading in a better direction.
Enjoy your steamy summer!
Sincerely,
J.B. L’Esperance, ChFC
If you have questions about our strategies or would like to open up an account with Barking Sands Capital, please give us a call at 952.500.8854 or 248.687.1400 or email us at jb@barkingsandscapital.com.