Quarterly Market Update

​There is no shortage of topics we could write about; however, the biggest news might be the lack of volatility over the last few months, as markets enjoyed fairly uninterrupted growth. It often feels like the volume is turned all the way up on any number of issues, but markets sometimes can tune out the noise and take things at face value. Of course, this does not mean that risks are absent or that everything happening in markets is good, but when you have a quarter like the one that just passed, it is worth taking some time to appreciate the calm.

Although the summer was fairly quiet, we are all aware of the various issues, such as geopolitics, domestic politics, and the discourse surrounding AI - both the hype and the criticism. It often feels like so many things are changing, generally for the worse, or so we are made to believe. None of these were resolved during the summer, and it is unlikely that they will be resolved anytime soon. The first half of the year saw markets more heavily influenced by these challenges, but more recently, whether due to fatigue or just a heightened sense of tranquility, they seemed to carry less weight for investors.
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Among the larger recent developments has been the insatiable need for electricity, driven by the AI buildout. In fact, after roughly two decades of stagnant demand, US power consumption is now growing at a fairly rapid pace. Companies are racing to meet this need, resulting in large backlogs for gas turbines, a common method of powering data centers. Despite the administration’s stance, the combination of batteries for storage along with solar energy continues to see strong near-term demand. In the longer term, a new nuclear renaissance could emerge, with both traditional power plants and small modular reactors. 

There has even been some progress in fusion technology in recent years, which holds tremendous potential for meeting our growing electricity needs.

Index Descriptions:The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the USA.
The Russell 2000 Index is a stock market index that tracks roughly 2000 US small companies, and is considered a key benchmark for US small cap stocks.
The MSCI EAFE Index is a stock market index that measures the performance of large- and mid-cap companies across 21 Developed markets countries around the world. Canada and the USA are not included. EAFE is an acronym that stands for Europe, Australasia, and the Far East.
The MSCI Emerging Markets Index captures large and mid-cap representation across 24 Emerging Markets (EM) countries.
The Bloomberg US Aggregate Bond Index, or the Agg, is a broad based, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the USA.
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