Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower that year. Stocks have recovered and a new bull market has started, but gains have been largely driven by only a handful of high-tech companies. Inflation remains an issue and the Federal Reserve has yet to lower rates. Is a recession in the offing? With all the uncertainty, what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

Rapidly rising inflation in 2022 knocked stocks into a bear market. While growth strategies suffered the most, value strategies also declined. Even bond prices were lower that year. Stocks have recovered and a new bull market has started, but gains have been largely driven by only a handful of high-tech companies. Inflation remains an issue and the Federal Reserve has yet to lower rates. Is a recession in the offing? With all the uncertainty, what's a potential equity strategy for investors amid all the uncertainty? Argus believes that Min Vol is an all-weather strategy that is timely in any investing climate. Academic literature and, more to the point, returns history, indicate that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis over various time periods.

We are reducing our second quarter 2024 forecast for GDP growth to 1.8% from 1.9%, primarily because residential fixed investment (housing) is poised to detract from economic growth after making a strong contribution in 1Q. We made a small increase to our expectation for election-year spending by state and local governments that keeps our full-year 2024 growth forecast at 1.7%. The key market-moving debates are on the persistence of inflation, consumers' capacity to drive two-thirds of a $28 trillion economy, and whether housing can continue to supplement economic growth without lower interest rates. The more-specific debate on consumers is whether softness in the 1Q GDP report is the start of a meaningful slowdown or whether spending is just normalizing after a strong run. Our outlook for the consumer is about the same as it was a month ago. We are more optimistic that inflation will moderate towards the Fed's 2% target, but have become more concerned about housing. We are, however, reducing our estimate of 2Q Personal Consumption Expenditures by 10 basis points to 2.3%. We now expect residential fixed investment to fall 2.2% versus our previous expectation for a 0.7% decline. Mortgage rates stuck near 7% are straining affordability and forcing prospective buyers to the sidelines. The news on inflation was encouraging in June. We are reducing our estimate of core PCE inflation in 2Q to 2.8% from 3.0%, which would be a nice decline from 3.7% in 1Q. Last month, we surprised some readers by predicting that back-to-school merchandise would be in stores right after the July 4 weekend. Target beat us by more than a week. The Walmart Superstore we visited had rollback prices on many school supplies. We continue to believe that back-to-school season is the next critical test for U.S. consumers. Our 3Q GDP estimate is now 1.6%, down from 1.8%, and our 4Q estimate is 1.9%, down from 2.0%. Our 2025 estimate is 2.0%.

The minor change in character we noted last week has spilled into the last week of June like a busted dam. The tranquil semiconductor trade has given way to some hefty profit taking. But, so far, funds have rotated into other parts of the stock market that either were in a slump or just weren't going anywhere. As we have said many times, rotation is important in any bull market -- and as long as the funds stay in stocks and don't end up in cash, indices like the S&P 500, NYSE, and the Dow Jones Industrials can do just fine. Of course, the other benefit of rotation from massive concentration to broad participation is that mid- and small-cap stocks get a nice bid.