The Richter Economic Timeline: What was known or knowable and what did the market say?

Richter Economic Timeline, S&P 500 Index % change, spread over the US Treasury Note, December 2019 to December 2023

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).

The rebound of the stock and credit markets following the low in March 2020 was largely bolstered by remarkable government stimulus, particularly in Canada and the U.S. The level of funding provided and the impact on the economic environment could not have been predicted at the outset of the pandemic. It is difficult to predict the duration of the current aggressive tightening cycle, and the related impact on corporations, industries, and the macro-economic climate.

During the fourth quarter of 2023, the S&P 500 stock index rebounded significantly and reached annual highs, nearly approaching the highest levels reached in 2021, solidifying the overall positive trend in Q4. This occurs contemporaneously with the following:

U.S. and Canadian growth have been surprisingly resilient, but credit delinquencies still raise concerns towards a potential soft-landing recession in the U.S. and to a lesser extent in Canada
Many experts believe the Bank of Canada prime rate may stabilize, with some predicting potential reductions in the near future depending on inflationary pressures.
Unemployment rates remained virtually unchanged in Canada and the U.S., with job growth slightly picking up in the U.S.
Innovative tech stocks (MATANA*) rallied throughout Q4 and finished the year at an all-time high. Experts believe 2024 will be a pivotal year for generative AI.
The onset of the October 7th Israel-Hamas War has also had a significant impact on surging gas prices, gold prices and currency exchange rates. Contemporaneously, there are continued concerns and uncertainties over the sustained military invasion of Ukraine by Russia.
The U.S. dollar has remained strong, strengthening against major currencies throughout 2023, 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.

Contact Person: Alana Geller, CPA, CBV, CFF, FEA