Hello, my name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas. Today is Friday, July the fifth, 2024, and I wanted to get on and share a few charts that I took from the Wells Fargo Investment Institute on what's been going on in the economy and the markets. They come out with these charts every now and then, and I always find them very interesting. And so I had a few of the numerous that they have that I wanted to share today. And over the next few weeks I want to try to share some others, but I hope you had a good 4th of July. I did. We had a nice time. It was pretty relaxing. The markets closed early on July the third at noon, and then they were closed on July the fourth of course. And so it was nice to have kind of a day, a day and a half off to spend time with friends and family.

So I hope you did as well. And I hope you got to see some fireworks if that's your thing. I hope we can see 'em from our neighborhood at the Friendswood Park not too far from us. So it was a nice fireworks show. Now when we look at the global economy scorecard, you can kind of see it's a lot of numbers going on this chart. And so I don't want to go through all of it, but right over here, kind of in the third column over is the us. The GDP growth year over year, and this is through the end of March 31st, was 2.9%. Inflation as of the end of May 31st was 3.3% over the prior 12 months. The interest rates right now have been steady here from the Fed, the central bank rate at five and a quarter to five and a half. The consumer confidence index has come down a bit, which that is something to kind of keep an eye on.

And the unemployment rate right now is coming in as of the end of May at 4% year over year. Now, where are we headed? So I know I've shown this chart before at different times, and usually we come out with this about every quarter, every six months, and I always think it's a good visual. And so you look at inflation, we do think inflation will continue to slow down, which will accommodate the Fed's lowering of interest rates. And as we talked here in the last month or so, when will that happen? That's the question that everyone's asking themselves, but we do think it will continue down. Last time that I looked, we were still saying we thought there would be a couple of rate cuts this year, maybe one next year, which of course is lower than what we thought at the beginning of the year because the economy has been pretty resilient and inflation has kind of been a little sticky here.

GDP growth coming down a little bit, wage growth, continuing to go up. Unemployment we just talked about year over year at 4%. It's still pretty historically low. We do expect that that will increase if we do see GDP coming down. Consumer confidence, worried over the jobs, markets, inflation, household finances. People don't have quite as much in savings now as they did before. They're utilizing more debt, credit card debt to keep their lifestyle going with inflation being higher. And so that makes confidence a little bit lower. And then volatility, we've seen that quite a bit here since what April, where the markets have been a little volatile and unfortunately we don't think that that will stop here short term.

So continuing on the theme from last year, as far as the markets go, they've been pretty narrow. And this year is kind of following suit to last year where last year, if you remember the Magnificent seven, they kept talking about made up such a big percentage of the gains in the s and p 500. When you look at the s and p 500 that's quoted in the paper and the news, if you remember, that's a market weighted index versus a spread out across all 500 stocks index, but a market weighted index. And when you look at the market weighted index so far through the end of the quarter here, the s and p was up roughly 15%. The Dow Jones Industrial average was up four to 5%. When you had a equal weighting across the s and p 500, it was closer to the Dow Jones Industrial average return.

And so it's been another year of narrow markets. And last year it was called the Magnificent seven. This year it's called the Fab four and the Fab four, and that's what this chart is showing is Nvidia, is Microsoft, is Alphabet, is Amazon, those are the four stocks. And that's what this chart is kind of showing. So if you see the stuff going on on the left hand side of that chart, the orange, the dotted blue, and then the red lines. So the year to date average of those four have been 56.6%. Those four, the weighting of the index is 17%. Those four make up 17% of the s and p 500. And then you see the red lined box there.

The returns of those four are making up 52% of the s and p five hundred's return so far this year and year. The magnificent seven made up a huge amount of the return of the s and p 500. And when you look at the remainder of the s and p 500 index, that's on the right hand side, year to date, roughly up 4.7%, and that makes up about 48% of the return. And so four stocks are making up over half the return. What does that mean? Well, it's just a data point. To me, it's a little more risky if those four stocks turned down, which we've seen that happen before I lived through the late nineties when we had something similar going on when the tech bubble burst. Will that happen this time? Who knows for sure. I was kind of saying the same thing last year and we have some variation of the same thing that went on last year, but historically speaking, that just doesn't normally last.

But so far this year, that's kind of where we are. That was a few of the charts that I find interesting. I'm sure I'll have more here over the next week or so from different things that are in the packet that of information, and I'll relay that as it comes up. We're kind of getting to the end of summer, although here in Houston it's really hot right now. But as we get through end of summer into fall, if you haven't done your strategy and review meeting, let's go ahead and do that. It's always good to revisit your situation, what's changed, what modifications do we need to make, what tweaks do we need to make to your financial picture? And so if you have some time, let's do that. As you get closer to Thanksgiving, I've always found that people, it gets busy, life happens, you get to the holidays and it's hard to really take time to focus on this. So just let us know when you have some time and we always look forward to talking. Have a great day. Thank you.