The Richter Economic Timeline: What was known or knowable and what did the market say?
Sources: Available upon request
Richter’s economic timeline plots local and world events together with a depiction of the volatility of the stock market (S&P 500) and credit markets (the spread of publicly traded BBB corporate bonds over U.S. treasury notes).
Stock markets declined in April, but then swiftly rebounded in the latter half of the second quarter of 2024. Investors anticipate lower inflation, earnings growth acceleration and further interest rate cuts. Overall, the sentiment in the stock market is optimistic.
During the second quarter of 2024, less inflationary pressure and rate cuts drove the S&P 500 to new records. Stock prices are defying fears of a recession, and many believe the economy is growing at a sustainable rate. This occurs contemporaneously with the following:
- The Bank of Canada reduced its overnight interest rate by 25 basis points, while the U.S. Federal Reserve indicated only a single interest rate cut this year despite easing inflation.
- Unemployment rates have risen in Canada and the U.S.
- Innovative tech stocks (MATANA*) have continued to surge in the market. Driven by the AI boom, tech stocks have experienced significant growth and businesses across various sectors are increasingly recognizing the potential of AI technologies.
- The October 7th Israel-Hamas War has had a significant impact on gas prices, gold prices and currency exchange rates. Contemporaneously, there are continued concerns and uncertainties over the sustained military invasion of Ukraine by Russia.
- Disruptions geopolitically and environmentally have impacted global maritime trade, severely elongating the time necessary to ship cargo by sea.
- The U.S. dollar remains strong, strengthening against major currencies, bolstered by a robust economy and growing U.S. Treasury yields.
*MATANA describes the market’s technology leaders – Microsoft, Apple, Tesla, Alphabet, Nvidia and Amazon.
This timeline was compiled by Richter Inc.’s Business Valuation and Dispute. A similar version was published in the CBV Institute’s Journal Advisory Group in 2020.
Contact Person: Alana Geller, CPA, CBV, CFF, FEA