December 2023 Monthly Review

Jordi Visser

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December brought a Goldilocks environment for markets as the holiday cheer lifted risk assets. The SPX built on November's strength with a 4.42% monthly gain. More significantly, winners broadened out with the Russell 2000 small-cap index (RTY) surging 12% for the month. This led to a 7%+ outperformance of the IWM vs SPY which was the largest monthly gain for the pair in the last 20 years. After a year where the Magnificent 7 outperformed the SPX 493, this helped diversified investors at the end of 2023. Credit also strengthened again with IG up over 12% across the last two months. The Goldilocks narrative stemmed from the continued easing in inflation, stoking expectations of a 2024 'Fed pivot' towards rate cuts. Both 2-year and 10-year yields fell sharply again for a second straight month.

As mentioned in past commentaries, once SVB passed, we started to see investors gradually begin taking more risk. Since 2019, COVID, variants, inflation, Russia’s invasion of Ukraine, and Fed rate hikes have created an environment of uncertainty. After SVB, this changed, and we look forward to more fundamentally driven idiosyncratic investing that benefits market neutral actively managed strategies.

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Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.