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April Market Update

Economic Data

The Consumer Price Index rose again for the third consecutive month, primarily driven by shelter and energy components. This year’s CPI readings have been drifting away from the 2% the Fed is targeting. As a result, the market is anticipating the Fed will be forced to delay their anticipated rate cut, potentially into next year. Furthermore, GDP for the first quarter of 2024 came in at a 1.6% annualized rate, far lower than the 2.4% consensus estimate. This low growth and persistent inflation have caused many to echo the 1970s era of ‘stagflation’. Stagflation is particularly challenging for policymakers to address because traditional measures to combat either inflation or unemployment may exacerbate the other issue.

Student Loan Relief 2.0

The Biden Administration's push to deliver student debt relief was restarted again, this time with a different legal approach. His first attempt used the Hero’s Act, an emergency measure passed by Congress during the pandemic. The hope for this strategy was that they could do it overnight. This failed, and in June 2023, the Supreme Court ruled that The Biden Administration overstepped. This ended up backfiring a bit due to a lot of young Americans feeling like the administration overpromised and underdelivered. This time he is using a new legal authority through a 1965 law called the Higher Education Act. Inside the law, there is Section 432(a)(6), which gives the education secretary power to “enforce, pay, compromise, waive or release” elements of the education system, which (the Biden Administration will argue) includes student debt. The hope is this more legally grounded attempt will hold up better in court.

Who will it benefit?

Cancel up to $20,000 of interest for all borrowers who have accrued or capitalized interest on their loans since entering repayment.

Automatically cancel debt for borrowers who would otherwise be eligible for loan forgiveness under income-driven repayment (IDR) plans, like the SAVE Plan, or Public Service Loan Forgiveness but are not enrolled in those programs.

Cancel student debt for borrowers with undergraduate loans who entered repayment at least 20 years ago and debt for graduate school borrowers who entered repayment at least 25 years ago.

Cancel student debt for borrowers who previously enrolled in low-financial-value programs.

Cancel student debt for borrowers experiencing hardship in their lives that prevents them from fully paying back their loans now or in the future.

More details can be found here (source). This new program applies to 27 of the 43 million borrowers, and the opposition is already lacing up their shoes to stop it. They are hoping to start delivering relief this fall.

Israel & Iran

As a result of the Israeli bombing of the Iranian consult in Syria, which killed several high-ranking IRGC (Iran's Revolutionary Guard Corps), Iran sent hundreds of missiles and drones toward Israel on April 13th, with minimal damage sustained. Israel responded to Iran by sending over a few more strikes, targeting the air defenses of the primary Iranian nuclear research facility. As of now, things seem to be calming down between Iran and Israel.

In a surprising twist, other Middle East nations essentially came to the defense of Israel according to a recent Wall Street Journal article (source). The Saudis and the UAE “shared intelligence that contributed to the successful defensive response to an Iranian air attack on Israel”. Normally, escalating tension in the Middle East leads to higher oil prices in anticipation of supply disruptions. This recent cooperation seems to have had a calming effect on oil markets, as oil prices have decreased since the Iranian attack. Furthermore, Syrian President Bashar al-Assad has recently stated they have had meetings with the US, intending to reestablish relations. Syria has long been an ally of Iran, and this comment suggests some distancing between the two nations.

Investing during geopolitical events has always presented challenges due to the inherent uncertainty. Human behavior tends to sell assets first, and then ask questions second. With the benefit of hindsight and an abundance of data, many have analyzed market returns after major geopolitical events. While these events are impactful on many different levels, the results of these historical performance studies suggest no statistical deviation from ‘normal’ market periods. After the initial shock of a headline wears off, the market inevitably refocuses on the quarterly earnings of individual companies, as well as the overall economic activity.

As always, if you have any questions, please do not hesitate to give us a call.

Citrus Wealth Management

O: 909.312.4412 // F: 909.312.4441

1461 Ford Street, Suite 103, Redlands, CA 92373

Any opinions are those of Citrus Wealth Management and not necessarily those of Raymond James. The information contained in this email does not purport to be a complete description of the securities, markets, or developments referred to in this material nor is it a recommendation. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results.


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