Market/Economy Update
Economic and inflation data released in January was generally positive, which helped the markets finish the month strong after a slow start to the New Year. The US economy did well in the fourth quarter of 2023, growing at an annualized rate of 3.3%. Inflation appears to be decreasing as job growth continues at a steady pace. January saw a significant jump in consumer confidence, reaching its highest level since mid-2021. This data reflects an improved outlook among Americans about the economy and their personal finances.
Canal Issues
Fears of the Isreael-Gaza conflict spreading into a regional war were partially realized in January. Iran directly entered the conflict with missile attacks on neighboring Pakistan, Iraq, and Syria, including naval drone attacks and the hijacking of a ship off their coast. These engagements are a deviation from their normal approach of proxy actions through the Houthis and Hezbollah (which still continue). The US and UK have stepped up bombing in Yemen against the Houthis to little effect, as the Houthis continue to threaten commercial shipping in the Red Sea. This has caused traffic through the Suez Canal to plummet by 85% (source), forcing ships to go around the southern tip of Africa. This has dramatically delayed shipments and increased costs for goods, mainly to Europe. To further complicate things, a drought in Panama has had similar effects, with their traffic down 37% from historical averages. For context, Panama Canal traffic only dropped by 19% at the depths of the pandemic (source). These canal issues are expected to increase inflationary pressure, which elevates the likelihood of a more restrictive interest rate policy by central banks around the world.
Chinese Markets
Chinese markets have had a rough few months. Their stock market has trended downward since September 2023. This is chiefly due to slowed economic growth, a ruptured real estate bubble, and weak consumer spending. Government interventions throughout the downturn have had little effect. In early October, they placed restrictions on shorting stocks (betting on stocks to go down). Next, the Chinese government ‘encouraged’ state-owned enterprises to make long-term investments in Chinese equities. More recently a ‘Stabilization Fund’ (codeword for bailout) was announced for $279 billion. Chinese markets are still down between 30% and 50% from recent highs, and are trading at 2008-2009 levels.
Retirement Contribution for 2024
For our employed readers, the IRS has announced the annual retirement plan contribution amounts; give us a call if you have any questions about your situation. For those 49 and younger, the contribution limit for 401(k), 403(b), most 457 plans, and the federal government's TSP was increased to $23,000 (up from $22,500). If eligible, the limit on annual contributions to an IRA increased to $7,000 (up from $6,500). If you are 50 or older this year, you can contribute $30,500 to your 401(k), 403(b), 457 or TSP, and if eligible, $8,000 to your IRA (source). For those on Medicare, your Part B premium went up by $10/month (for most of you) from $164/month to $174/month.
As always, if you have any questions, please do not hesitate to give us a call.
Citrus Wealth Management
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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.