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Weekly Economic Update: April 8, 2024

Stocks dropped last week as investors focused on “what's next” for interest rates after mixed comments from multiple Fed officials.

Fed Officials Weigh In
Stocks struggled out of the gate again last week, ending Monday and Tuesday in the red on concerns that recent economic data could derail the Fed’s plan for short-term rates.

The markets recovered Wednesday through Thursday morning when weekly jobless claims were better than expected. But stocks fell broadly Thursday afternoon following mixed comments from multiple Fed officials. All three averages ended the day down more than 1 percent for the first time in a month.

On Friday, a strong jobs report gave investors much-needed confidence. The U.S. economy created 303,000 jobs in March—higher than economists’ expectations—while unemployment dropped slightly to 3.8 percent. Markets rallied after the news, but not enough to recoup all weekly losses.

Holy Sweet Tooth, Batman! Cocoa Prices Soars 

As some of you may have seen, chocolate prices are climbing due to the cost of the underlying cocoa. In hindsight, when looking at the chart, you can see that cocoa prices have surged higher in short order. But who has the foresight to say what’s next?

Most cocoa beans are grown in West Africa, where climate change, disease, and illegal gold mining have upended crop harvests.

“In the financial markets, hindsight is forever 20/20, but foresight is legally blind,” wrote Benjamin Graham in his landmark 1949 book, The Intelligent Investor, the Definitive Book on Value Investing. “And thus, for most investors, market timing is a practical and emotional impossibility.”

This price action helps highlight the dangers of market timing. Markets move in cycles, which include downtrends and uptrends. In rare instances, you get hyper moves, like today’s cocoa market.

Trying to time the markets is exhausting. Moving in and out of the markets based on economic analysis or business headlines must be challenging. Think about the disappointed market timer who followed the analysis that concluded cocoa prices would trend lower in 2024!

With investing, it's critical to “tune out the noise” and focus on what you can control, like your time horizon, risk tolerance, and goals. There will be ups and downs in 2024. Market timers will be busy.

Tax Tip: Reporting Cash Payments 

Are you expecting a little extra cash from a gift or sale? The IRS would like to know. Individuals, corporations, and partnerships must report cash transactions of more than $10,000.

These cash payments can include jewelry sales, a gift from a family member, an overseas purchase, or any other cash transaction. You also need to report cash payments received in one lump sum, in two or more related payments within 24 hours, or as part of a single transaction or two or more transactions in the last year.

File Form 8300, titled Report of Cash Payments Over $10,000 Received in a Trade or Business. This form requires information about the benefactor and the recipient of the cash, a description of the transaction, and information about any other parties involved.

*This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov

Parting Shot

Happy Birthday to our State Flower 
 

The Rocky Mountain Columbine was designated as our state flower in April 1899 after winning the vote of Colorado’s schoolchildren. The flower colors symbolize the state, the blue petals represent our clear blue skies, the white center cup represents our snow-capped mountains, the yellow stamens represent our region's gold mining history.  The Rocky Mountain Columbine is a protected species and it is Illegal to pick them in Colorado. Photo Credit: Alaine Nicole.

Photo at top:  Blucifer, Denver International Airport by Steele Street Photography.

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Capstone Investment Financial Group, LLC

Colorado Springs/Denver

719-477-9883

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