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December has seen mixed results across markets. The fun started two weeks ago when the Fed delivered a hawkish rate cut, cutting short-term rates by another 0.25%, but signaling fewer rate cuts in 2025. The move had largely been expected, but investors took it as an opportunity to have a mini meltdown. Higher short-term rates mean a little more pressure on companies while also pressuring longer-dated maturities in fixed-income markets. We expected the move and saw the selling as an overreaction. However, we do have to consider the impact that an uncertain fiscal policy outlook may have on the Fed and monetary policy. That week, we also got our first look at DOGE (Department of Government Efficiency), as Elon Musk had a hand in torpedoing an over 1,500-page budget bill, stuffed with all kinds of spending provisions. Eventually, congress passed a much smaller bill (around 120 pages) that avoided a government shutdown. This was the opening battle between DOGE and Congress to control spending while defining what each side considers essential vs. wasteful. Time will tell how this battle ultimately plays out, and what affect it has on markets. Stock markets may also be experiencing a combination of profit-taking and rebalancing as we approach the new year, and this could be a modest headwind over the next few weeks.  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 represent- ing intermediate term investment grade bonds traded in the USA. Accounts managed by StraightLine follow materially different investment strategies from the composition and performance of indices referenced herein and are not managed to mirror a specific index. Unless indicated otherwise, indices are unmanaged, cannot be invested into directly, are inclusive of reinvested dividends, and do not include the deduction of transaction, custodial or investment management fees that would further reduce actual performance if included. Indices are the property of their respective owners, all rights reserved. Periods greater than one year are annualized. Disclosures: Information presented is for informational purposes only. StraightLine Group, LLC (“StraightLine”) is a registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Past performance is not indicative of future results. Investing involves risk, including the possibility of loss of principal. The ideas and opinions expressed herein do not constitute legal, tax, or investment advice or a recommendation of any particular security or strategy. Before making any investment decision, you should seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory and foreign currency require- ments for any investment according to the laws of your home country and place of residence. Any forward-looking statements or fore- casts are based on assumptions and actual results may vary. Information presented from third parties is believed to be reliable, but no warranty is provided. StraightLine is not required to update information presented, unless otherwise required by applicable law. For more information about StraightLine, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov/firm/ summary/127401 or contact us at 248-269-8366. Comments are closed.
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