Brandon Cawley, CFA® Director of Investment Management Brandon.Cawley@MWAteam.com
Our Thoughts On Q4 2024
Financial markets climbed the wall of worry again in 2024 as investors enjoyed sizeable gains in equities and positive returns in fixed income.
Uncertainties around the new US administration, the Federal Reserve’s policy path, geopolitics, and the global economic outlook remain, but have resulted in commendable performance over the past twelve months. Looking forward, there is much fog on the horizon, however. Monetary, fiscal, and trade policy likely appear at the forefront of every investor’s list of concerns going into the new year. We recognize these as critical factors to the economy and financial market performance but also believe that the strong underpinnings which have delivered exceptional returns in US markets will continue to persist in 2025.
Policy Complications
The incoming Trump administration was initially met with market optimism on tax cuts, deregulation, and a generally positive stance toward financial markets, as observed by his last term in office. The boost in sentiment quickly abated as the proposed fiscal and trade policies challenge the long-term viability of a deepening budget deficit and the current structure of international relations. The fear that new tariff policy may escalate international trade disputes, instead of increasing the bargaining power of the US, has led to uncertainty in well rooted global supply chains. The market interpretation of these policies has led to higher bond yields and a strengthening US dollar, which have weighed on US and international equities alike. This has been especially prevalent in the more cyclical and value-oriented sectors of the market.
We view tariffs as a tool to help offset government revenue lost from the proposed tax cuts, directly by way of tariff income and indirectly by generating international business for US companies. The newly approved Department of Government Efficiency (DOGE) should also, at the margin, be deficit friendly. Evidence of progress on spending plans and the viability of offsetting fiscal measures may be necessary to fully stabilize the bond market. Overall, we do not view these policies as overly disruptive to financial markets and believe that confidence will be restored as they are enacted.
The Federal Reserve has leaned toward a tighter policy stance post-election and is signaling a flatter path for rate cuts than was priced earlier in the year. Core PCE, the Fed’s preferred inflation metric, has annualized 2.5% over the past 3-6 months which is also their expectation for 2025. In the absence of broad-based inflationary drivers, we view this as an acceptable near-term level for financial markets and continue to focus on the labor market as we see a more elevated risk of deteriorating conditions. This is especially evident in the hiring rate and small-business surveys where only 18% of small businesses expect to create new jobs in the next few months. With this view, it appears likely that the Feds will surprise us with more than two rate cuts in 2025.
Market Observations
Performance dispersion remained a theme in Q4 as the election results and a volatile interest rate environment shifted money flows away from sectors more adversely affected by incoming policy expectations and higher borrowing cost. This combination of factors was detrimental to international equities sentiment as the new administration aims to extend the US exceptionalism of the past decade. Healthcare companies have been heavily scrutinized by the Trump administration on both the insurance and pharmaceutical sides of the business. The typically low margins of consumer staples businesses could be one of the harder hit sectors if new goods tariffs are enacted. A rising US dollar weighed on commodity prices which flowed through to negative returns in the materials sector. The business models of real estate and utilities sectors depend on high levels of borrowed funds and have sold off on higher interest rate expectations since the end of September
The prospect of broad deregulation is most impactful for financial companies and set the stage for a more robust lending environment. Technology, energy, and domestic industrial production will likely be key focal points for international trade negotiations which contributed to their outperformance. The prospect of indefinite tax cut extensions improves the margin outlook of all US based indices.
Fixed income markets sold off in Q4 as skepticism of the Trump administration budget, and the potential for a higher real growth rate, outweighed contained inflation metrics. Though this type of market action echoes other periods in history, this is the first time that Fed cuts of 1% have been concurrent with a 1% rise in the 10year treasury yield. Despite interest rates becoming uncomfortable for the economy and potentially other asset classes, the higher coupon received on fixed income holdings provides a suitable cushion for investors at these levels.
The Year Ahead
Markets will need to digest an assortment of risks in 2025. Significant changes to fiscal, regulatory, and monetary frameworks will clash with a changing economic backdrop and market
Themes likely include a continuation of productivity gains from AI and other technological advances, elevated but stable inflation, and a weaker labor market. US exceptionalism should remain a constant. We have adjusted and will continue to adjust our client portfolios as we see appropriate with respect to incoming policy announcements, economic
and market data. As always, we strive to meet and exceed the financial goals of our clients and rely on the long-term, repeatable process
Increasing Tariffs: What It Means for Consumers, Businesses, and the Economy
With the election now behind us, there has been a lot of discussion on increasing tariffs on foreign countries to generate revenue for the U.S. Tariffs, which are taxes imposed on imported goods. This has long been a tool used by governments to protect domestic industries, encourage local production, and generate revenue. The imposition of increased tariffs, especially within the context of a globalized economy, can have profound and multifaceted implications. Whether introduced as a trade policy measure or in response to geopolitical tensions, the decision to raise tariffs can have significant impacts on consumers, businesses, and the broader economy.
Increased Domestic Production
Increased Government Revenue
Higher Prices for Consumers
A potential effect of increased tariffs is higher prices for consumers. When tariffs are imposed on foreign goods, companies that import those goods face higher costs.
In turn, these companies typically pass on those costs to consumers in the form of higher prices. This can affect everyday goods like electronics, clothing, and food, particularly if those goods are sourced from countries subject to the tariff increase.
For example, if the U.S. raises tariffs on Chinese-made electronics, American consumers might see higher prices on smartphones, laptops, and other tech products.
Disruption to Supply Chains
Increasing tariffs can disrupt established supply chains, especially in industries that rely on a global network for materials and components. For manufacturers, this can lead to higher production costs and the need to find alternative suppliers. In some cases, businesses might relocate parts of their supply chains to countries not subject to tariffs, which can lead to additional costs and logistical challenges.
For instance, automakers sourcing parts from overseas could face increased expenses if tariffs on steel, aluminum, or auto parts are raised. This could slow down production and increase the cost of manufacturing, potentially resulting in higher prices for consumers.
The goal of the proposed tariffs is to spur domestic production of goods and decrease the reliance on foreign nations. If a company is forced to pay a higher price to import goods for sale domestically, they are going to look at all options to protect their margins. One of these options is to find a domestic supplier (or bring production in-house) to avoid paying the tariff. This can lead to an increase in employment and overall Gross Domestic Product for the country.
The COVID-19 pandemic in 2020 highlighted the vulnerability of global supply chains to disruptions like shipping shortages and travel restrictions. Increased domestic production capacity could have mitigated economic losses during this period. Had there been more production ability domestically, we may have seen a lower economic loss during that time.
Another benefit of higher tariffs is the increase in revenue for the federal government. Currently, the main source of revenue for the federal government comes from taxes paid by consumers and income earners. Increasing taxes that foreign countries pay to the U.S. could lead to lower taxes required by consumers and U.S. citizens to pay. Additionally, the national debt has grown significantly in recent years. The increase in revenue could be used to help pay down that debt.
The decision to increase tariffs is a multifaceted issue with both potential benefits and drawbacks. While it can safeguard domestic industries and generate government revenue, it can also result in higher consumer prices, disruptions to supply chains, and strained international trade relationships. Conversely, it can stimulate domestic production and increase government revenue. As such, policymakers must carefully weigh these considerations when contemplating tariff adjustments.
Sources: https://www.investopedia.com/news/what-are-tariffs-and-how-do-they-affect-you/
Luke Charlton
Planning Analyst
Luke.Charlton@MWAteam.com
Decades of Change: Homeownership’s Evolving Landscape
Homeownership is often considered the cornerstone of the American Dream, and the journey of first-time homebuyers in the United States has seen significant changes over the past few decades. From the early post-war era to the present day, various factors such as economic conditions, social trends, and housing policies have shaped the landscape of home buying. I uncovered valuable insights by examining the historical shift in age and median home prices from the 1960s to 2024, highlighting the unique challenges and opportunities facing today’s new homeowners.
The 1960s: The Start of a New Era
In the 1960s, the average age of first-time homebuyers was just 23 years old, marking the beginning of a trend toward earlier homeownership. The median home price in 1960 was $11,900, which is roughly equivalent to $123,320 today when adjusted for inflation. By the end of the decade, the average price had more than doubled to around $27,000, translating to about $213,457 in today’s dollars. This rise reflected a burgeoning economy and the growing preference for suburban living.
The 1990s: Stability Amidst Changing Trends
By the 1990s, the average age of first-time homebuyers had risen to 31 years old. In 1990, the median home price was $151,200, and by the decade’s end, it increased to approximately $204,800, equivalent to $374,620 today. This period saw a level of stabilization in the housing market, yet challenges remained, particularly with job security and economic fluctuations impacting the ability to purchase homes.
The 2000s: A New Millennium of Housing
The steady increase in the average age of first-time homebuyers continued into the 2000s, reaching 32 years old. The median home price started at $204,800 in 2000 and rose to around $272,900 by the end of the decade, approximately $388,401 today. This era was marked by easily accessible credit and a housing boom which drove home prices to new highs, laying the groundwork for the challenges that would arise in the next decade.
The 2010s: Post-Crisis Recovery
In the 2010s, the average age of first-time homebuyers remained at 32 years as they navigated the aftermath of the Great Recession. The median home price in 2010 was $272,900, rising to approximately $297,000 by the end of the decade, equivalent to about $459,810 today The housing market’s recovery offered hope to many buyers, but affordability remained a significant challenge, particularly for young people.
The 1970s: A Shift in Demographics and Pricing
Moving into the 1970s, the average age of first-time homebuyers increased to 29 years. The decade witnessed a significant jump in housing prices, with the median home price in 1970 at $27,000. By the end of the decade, this had soared to approximately $74,200, equivalent to about $313,506 today. The 1970s were characterized by economic turmoil, including skyrocketing inflation, which contributed to the rising home prices and influenced the age at which individuals began purchasing homes.
The 1980s: Economic Growth and Increasing Prices
The trend of first-time homebuyers at age 29 continued into the 1980s, as buyers navigated a challenging market. The median home price in 1980 was $74,200, and by the end of the decade, it had climbed to around $151,200, or about $370,381 today. This increase can be attributed to a robust economy with more access to financing, allowing more families to consider homeownership despite the rising costs. 19 60 19 70 19 80
19 90 20 00 20 10 20 20
Present Day: A New Era of Homeownership
Now in 2024, the average age of first-time homebuyers has increased significantly to 38 years old. The median home price stabilized, currently standing at $412,000. This marks a notable shift in how long it takes for individuals to enter the housing market, influenced by factors such as rising student debt, fluctuating job markets, and a limited supply of affordable housing.
The path to homeownership has evolved dramatically over the past several decades. With rising home prices and an increase in the average age of first-time buyers, the journey has become more complex. Understanding these trends is crucial for policymakers, economists, and prospective homebuyers as they navigate the ever-changing landscape of the real estate market. As we look to the future, it remains to be seen how these dynamics will continue to shape the housing market and what innovative solutions may arise to help future generations achieve the dream of homeownership.
Sources: https://www.axios.com/2023/11/20/american-housing-market-older-homeowners-2023 • https://www.nar.realtor/newsroom/first-time-home-buyers-shrink-to-historic-low-of-24as-buyer-age-hits-record-high • https://www.self.inc/info/first-time-homebuyer-statistics/
Jennifer Schepers
Implementation Specialist
Jennifer.Schepers@MWAteam.com
Preserving Family History and Traditions: Ensuring a Lasting Legacy for Future Generations
Preserving your family’s history and traditions is an invaluable way to ensure that future generations inherit more than just material wealth. By safeguarding the stories, values, and practices passed down through the years, you help create a legacy that goes beyond finances. Family history fosters a deep sense of identity, connection, and belonging, providing the next generation with the tools to navigate life with resilience and a clear understanding of their roots.
Why Family History and Traditions Matter
1.A Stronger Sense of Identity
Preserving your family’s history is a powerful way to connect with your roots and build a strong sense of identity. By learning about your ancestors and the challenges they faced, you can gain a deeper understanding of your own life and the choices you make. Whether through family stories, heirlooms, or cultural practices, exploring your family’s history strengthens your personal foundation and fosters a sense of pride in your lineage. This connection to your past not only enriches your own life but also benefits your children, boosting their self-esteem and helping them navigate life with confidence.
2.Building Resilience Through Ancestral Wisdom
Family history serves as a source of strength during difficult times. Discovering how your ancestors faced hardships, whether during economic struggles, war, or personal loss, can offer a profound sense of resilience. By reflecting on their perseverance, you’ll find inspiration to overcome your own challenges. Understanding these patterns can also help break harmful cycles, promote healing, and encourage forgiveness across generations.
3.Fostering Family Bonding and Continuity
Traditions provide an anchor for families. Whether it’s a holiday ritual, a weekly gathering, or a shared family project, traditions build lasting memories and reinforce familial bonds. Research shows that families who maintain traditions have closer bonds and children who understand their family history are better equipped to handle stress and life’s challenges. Consistent rituals foster trust, nurture a sense of belonging, and deepen connections across generations.
4.Cultural Preservation
Family history is a rich tapestry of cultural heritage, reflecting traditions, values, and stories unique to your family’s background. By preserving this heritage, you safeguard important cultural touchstones—whether it’s through language, religious practices, or culinary traditions. As a result, future generations are not only aware of their roots but have more motivation to carry these traditions forward.
Practical Tips for Preserving Your Family’s Legacy
Preserving your family’s history and traditions does not have to be complicated—it can be an enjoyable and meaningful process. By taking small, intentional steps, you can ensure that your family’s unique stories, values, and customs are passed down to future generations. Whether you’re documenting memories, sharing heirlooms, or creating new traditions, these efforts will strengthen family bonds and provide lasting connections to your heritage. Here are some practical ways to help keep your family’s legacy alive and thriving for years to come.
1.Create a Family History Journal or Record
Documenting family stories, experiences, and milestones is one of the most meaningful ways to preserve your history. Collect written accounts, photos, and keepsakes in a family journal or digital archive, allowing each generation to add their perspective. Tools like Meminto make it easy to capture these memories and share them with future family members.
2.Start or Continue Family Traditions
Traditions offer comfort and continuity. Whether it’s a special holiday celebration, a weekly family dinner, or a unique vacation ritual, these regular activities help pass down values and strengthen family ties. Make an effort to continue these practices and involve younger generations in creating new traditions that they can one day pass on.
3.Use Technology for Preservation
Modern tools make preserving family history easier than ever. From digital photo books and genealogy websites like Ancestry.com to video recordings of family stories, technology enables you to create lasting archives of memories. Apps and websites can also help you trace your family tree and uncover unknown branches, adding depth to your understanding of your heritage.
4.Pass Down Heirlooms and Artifacts
Family heirlooms—whether jewelry, letters, or objects—are physical embodiments of your history. Sharing these items with future generations not only keeps traditions alive but also provides tangible connections to the past. Consider creating a family “treasure chest” that houses these meaningful objects for the next generation to cherish.
5.Organize Family Reunions or Gatherings
Reunions are an excellent way to reconnect with relatives, especially those you may not see often. These events allow for the sharing of stories, the celebration of traditions, and the passing down of family wisdom. They also provide an opportunity to capture memories in the form of group photos, recorded stories, and personal reflections.
Family history and traditions are more than just sentimental relics of the past—they are living, breathing elements that shape your family’s identity and legacy. By preserving these aspects of your heritage, you ensure that future generations inherit not just wealth, but also resilience, values, and wisdom to help guide them through life’s challenges. This enduring legacy will not only keep your family connected but will also empower them to thrive in an ever-changing world.
MWA Team News!
MWA Annual Holiday Luncheon
Our annual holiday luncheon took us off-site to Fogo de Chao, where we celebrated the season surrounded by delicious food and great company. A highlight of the event was our Chinese auction gift exchange, a lively tradition where each participant brought a gift valued around $25. The thrill of choosing a new gift or “stealing” from a colleague added an element of fun and humor, making for memorable moments that truly encapsulated the joy of the holiday season. Together, these events reminded us of the importance of teamwork, laughter, and celebration as we wrapped up another successful year.
MWA Annual Cookie Swap
We also embraced the holiday spirit with our annual cookie swap, which was a sweet success. Each team member brought in their homemade creations, ranging from classic chocolate chip to innovative German chocolate cookies. The office was filled with the delightful aroma of baked goods, and over a lovely lunch, we shared our treats and many laughs!
Welcome the New Addition to the Webb Family
(Tina)
Congratulations to our Senior Planning Analyst, Jonathan Webb, and his wife, Katie, who welcomed their 3rd daughter into their family in October 2024. Devlyn Diem joins big sisters Madelyn Mae (Maddy) and Jocelyn Jane (JJ). Jonathan loves being a “girl dad” and we wish him and his beautiful family a lifetime of happiness!!
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How to Reach Us
Wealth Advisory Services
Peter D. Maller, MBA, CFP®, AEP® – Founder | Peter.Maller@MWAteam.com
Matthew Aversa, ChFC® – Managing Partner, Financial Planner | Matthew.Aversa@MWAteam.com
Devon G. Gluck, CFP®, CIMA® – Partner, Financial Planner | Devon.Gluck@MWAteam.com
John E. Layug, MBA, CFP®, AEP® – Partner, Financial Planner | John.Layug@MWAteam.com
Brandon Cawley, CFA® – Director of Investment Management | Brandon.Cawley@MWAteam.com
Luke Charlton – Planning Analyst | Luke.Charlton@MWAteam.com
Cristina “Tina” Kothari, MBA, CDFA™ – Associate Director | Tina.Kothari@MWAteam.com
John “Jack” Lombardo, CFP® – Senior Planning Analyst | Jack.Lombardo@MWAteam.com
Eric McIntyre, CFP® – Senior Planning Analyst | Eric.McIntyre@MWAteam.com
Jonathan Webb, CFP®, MBA – Senior Planning Analyst | Jonathan.Webb@MWAteam.com
Louis Wilson, CIMA®, CFP® – Senior Planning Analyst | Louis.Wilson@MWAteam.com
Zellie Wothers, CRPS®, CFP® – Associate Director/401k Specialist | Zellie.Wothers@MWAteam.com
Operations and Scheduling
Mary Goles, FPQP™, aPHR® – Director of Operations | Mary.Goles@MWAteam.com
Administrative Support and Implementation
Kara Scott, FPQP™ – Director of Administration | Kara.Scott@MWAteam.com
Denise Poferl, FPQP™ – Senior Implementation Specialist | Denise.Poferl@MWAteam.com
Jennifer Schepers – Implementation Specialist | Jennifer.Schepers@MWAteam.com
Marketing and Client Experience
Jaida Maller – Lead Marketing and Communications Specialist | Jaida.Maller@MWAteam.com
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