January 2025 Newsletter

Waterstone January Newsletter – New Year

Uniquely Waterstone for our unique Waterstone clients 

In this Issue: 

1. Big picture: U.S. strength continues.
2. The Business Cycle Reverses
3. Strategist Assessment – Clark Capital Gauges
4. Different kinds of inflation
5. Prep for 2025 office visit
6. New Year’s Resolutions – it’s time management

https://www.capitalgroup.com/content/dam/cgc/shared-content/documents/webinar/2025_Outlook_report.pdf
“Currently there is no alternative to the United States. Treasury Bonds are still the most reliable asset on earth.” Europe has challenges. China grapples with demographic imbalances.

_{The US is the world’s safe haven, Katie Martin, Financial Times, The Week, Dec 6, 24 pg 3}

A mid-cycle economy is generally characterized by rising corporate profits, accelerating credit demand, softening cost pressures and a shift toward neutral monetary policy. “We’ve seen all four of those in 2024,” Franz notes. _{(American Capital link above.)}

Clark Capital methodology measures 5 key categories that reflect the impact of the Federal Reserve policy. Green arrows indicate improvements after the interest rate cut. Clark repeats the sentiments abpve/

Clark Capitals November – looking forward 6 to 9 months. See this link for their commentary. https://ccmg.com/?s=gauges&e_search_props=6ee40e4-5643

Inflation: Goods/Services

Inflation has morphed into a different creature or maybe creatures than it was in 2022, and it’s proving difficult to slay. It’s not the usual suspects — groceries, gasoline, cars, appliances — that are now driving inflation back up. Instead, it’s services, such as entertainment, insurance, childcare, and haircuts, that are now rising in price by more than incomes.

Services inflation is harder to spot than increases in the cost of items on store shelves, where the price is listed on or near the product. Unlike staples, some services, such as medical care or auto repair, are infrequent expenses where the price isn’t clearly marked in the first place. Insurance is typically repriced only once or twice per year, and consumers don’t always remember what they paid last time.

But families spend nearly twice as much on services as they do on goods, so this inflation definitely bites. _{Wealth Advisor, Yahoo Finance Dec 17,2024}