The Factor Report

Market Wrap

For the week ended January 17, 2025, stocks reversed the course of the prior two weeks and headed higher. As has been the case for a few years now, it was all about inflation data and what that might mean for the next Federal Reserve rate decision. On Tuesday, the Producer Price Index came in well below expectations and was actually flat (no price increases) for December. That was followed by Wednesday's Consumer Price Index report, which continued to show inflation, but at a slower pace than forecasted. Thursday brought a slight dip despite "Fed friendly" data (slower retail sales and higher weekly jobless claims) that was likely driven by some profit taking. But the buying resumed on Friday as investors continued to place bets on more rate cuts. A lot remains to be seen on that front as the central bank doesn't meet again until January 28; their outlook and rate decision will be announced on the 29th. Bonds were also higher on all of the data, sending the 10-year US treasury lower to 4.63%.

Performance Summary

As shown in the chart, the US was by far this week's winner and Emerging Markets brought up the rear. Within the US, despite a strong rally on Friday, the Tech-heavy Nasdaq lagged as the more traditional stocks of the Dow Jones Industrial Average outperformed thanks to strong bank earnings. From a factor perspective, Momentum outperformed the global All Country World Index (ACWI).

In The News

The IRS has released new catch-up guidance for Roth 401(k) plans.

https://www.thinkadvisor.com/2025/01/14/irs-releases-roth-catch-up-guidance/?kw=IRS%20Releases%20Roth%20Catch-Up%20Guidance&utm_position=1&utm_source=email&utm_medium=enl&utm_campaign=dailywire&utm_content=20250114&utm_term=tadv&oly_enc_id=6911H2583589A7Z&user_id=3d158419d93f4751d4b3b79dd78d9abf446b89b61e92e7567cb4126b86cb53c5

A great perspective on the Social Security system, which some have called a Ponzi scheme.

https://www.thinkadvisor.com/2025/01/10/social-security-has-problems-but-its-no-ponzi-scheme/?kw=Social%20Security%20Has%20Problems,%20but%20It%27s%20No%20Ponzi%20Scheme&utm_position=1&utm_source=email&utm_medium=enl&utm_campaign=retirementreport&utm_content=20250114&utm_term=tadv&oly_enc_id=6911H2583589A7Z&user_id=3d158419d93f4751d4b3b79dd78d9abf446b89b61e92e7567cb4126b86cb53c5

The final tally on stocks under the Biden administration.

https://www.marketwatch.com/story/a-final-look-at-how-the-u-s-stock-markethasperformed-under-joe-biden-2d454bdb?mod=home-page

Disclosures

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s). Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized investment advice from Metric Financial.

All data and performance information sourced from Morningstar and MarketWatch, unless otherwise indicated.

USA is the MSCI USA index, Non-US Developed is the MSCI EAFE index, Emerging Markets is the MSCI Emerging Markets index, and All Country World is the MSCI ACWI index. One cannot invest in an index. Because the factor indexes have varying inception dates, some of the returns provided are back-tested and do not represent actual performance. Inception dates are as follows:

Momentum = MSCI ACWI Momentum NR USD Index (Inception: 11/30/95)

Value = MSCI ACWI Enhanced Value NR USD Index (Inception: 5/29/15)

Quality = MSCI ACWI Quality NR USD Index (Inception: 5/29/92)

Low Volatility = MSCI ACWI Minimum Volatility (USD) NR USD Index (Inception: 5/28/93)

Size = MSCI ACWI Risk Weighted NR USD Index (Inception: 4/6/11)

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All written content is for information purposes only. Opinions expressed herein are solely those of Metric, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.