Market Overview
The stock market had another positive month in January as it responded positively to favorable economic data. Throughout January the SPY posted a return of +1.59% (same YTD).
The S&P continued its gains from December (4.42%) and November (8.92%) for a third consecutive month, resulting in a strong 15.54% three-month rally as the economy continues to show strength. Market now expects that the Fed will cut rates in May/June, instead of March. On the other hand, the Nasdaq Composite performed +1.0% (same YTD). On the Fixed Income side, the 10-year Treasury yield was roughly flat, starting and ending the month at 3.86%, despite peaking at 4.18% on January 23. Yields on the 2-year Treasury dropped in January, starting at 4.25% and falling to 4.19%. High-yield bonds were flat.
The recession that economists broadly feared in 2023 never showed up. The U.S. economy grew 3.1% over the past year, thanks to a resilient labor market that supported strong consumer spending. The final three months of the year looked a lot like the so-called soft landing Federal Reserve officials are trying to achieve. Growth was strong, while inflation cooled to an annualized rate of 1.7%, below the Fed’s target inflation rate of 2%.
After two years of soaring home sales that started during the pandemic, the housing market skidded to a halt last year. Home sales last year dropped to the lowest level in nearly three decades after elevated mortgage rates and a lack of homes for sale frustrated buyers. Existing-home sales dropped 19% in 2023 from the prior year to 4.09 million, according to the National Association of Realtors. That total was lower than during the subprime crisis and the lowest full-year level since 1995.
February will continue the earnings watch as retail reports come in, along with the market sizing up if the consumer will continue to spend (and charge). The focus on politics will also continue to grow, as the possible Biden-Trump rematch buzz has already started to filter into the general public, even though the primaries have just started. Typically, the Street will start to take market positions on the expected November outcome in September, as a clearer picture on not just the presidency emerges, but that of the House and Senate.
Teks Alpha Performance (%)
| JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC | YTD | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | — | — | 1.36 | 0.79 | 0.77 | 0.80 | 1.51 | 1.61 | 1.15 | 2.56 | 1.70 | 0.05 | 12.9 |
| 2022 | -0.65 | 1.22 | 1.22 | -0.10 | -1.85 | -5.7 | 2.35 | -1.61 | -0.5 | 0.33 | -3.1 | -0.7 | -9.0 |
| 2023 | 3.5 | 0.45 | 1.45 | 2.20 | 5.20 | -1.50 | 0.2 | 1.10 | -1.50 | -0.3 | 0.6 | 0.35 | 12.0 |
| 2024 | -0.75 | — | — | — | — | — | — | — | — | — | — | — | -0.75 |
Teks Alpha Performance vs Benchmarks since inception (March 2021)
| TEKS ALPHA | SPY | HFRI | |
|---|---|---|---|
| Effective | 14.22% | 28.68% | 12.27% |
| Annualized | 5.06% | 10.21% | 4.37% |
| STD Dev | 6.63% | 17.64% | 6.44% |
| Shape Ratio | 0.31 | 0.41 | 0.21 |