Welcome to the Aquinas Wealth Advisors first Quarter Market update. Lots to talk about today. I’m joined by Greg Dukes, Executive Vice President, Will McMahon, Director of Equity Selection, and there is lots of stuff going on, lots to talk about.
I think the first thing out of the gate we have to tell our clients about is what the Vatican came out with. Will, he could speak this little bit. The Vatican came out with some new indexes which are which are I think, good news, but can you give us a little bit more on that please?
The Vatican Bank in in partnership with Morningstar launched launched 2 new indices geared towards both US and Eurozone investing. These indices are described by the Vatican Bank and Morningstar as catholically aligned.
While we think this is a great step in the acknowledgement in the need, the growing need for Catholic aligned investing, it’s the view of Aquinas wealth that these indices just don’t go quite as far. You’re not there yet, right? They haven’t told us all the 50 stocks, there are 50 stocks in each index. These aren’t available for sale yet. These are just guidelines. But they did say something. They said these things are fully compliant with the teachings of the church and we always talk about the difficulties and this is new to the Vatican. So when it comes to screening, it’s new, right? It’s complicated, Greg, but we always talk about it. It’s tough to know how high is up. Maybe is that a fair was?
Very fair way to say it. The interesting thing that we’re going to see coming out of these indices, yes, to yours and Will’s point exactly, is what companies are being used in here. What companies are being used in the US index versus the Eurozone index and what passes our testing criteria?
So even if something doesn’t pass our criteria today, which a lot of it doesn’t, some of the companies they mentioned really don’t, the ones, the ones that came out with first, they don’t pass our testing nor they pass any really rigorous Catholic testing in our opinion. But it’s a good, well, it’s a good first step. Is that what we’re thinking?
Yeah, absolutely. We think the acknowledgement by the Vatican that that these types of products are in demand is absolutely a huge step. And we expect, you know, further iterations and you know, for the folks who, who want to be Catholic aligned, there’s obviously some other products out there.
That’s a great way to think of it. So we’ll do our best to help our friends in the Vatican do a little bit better if they’re testing. We certainly don’t want to people. Some of the some of the companies they name the only three or four they name, I think are some of the biggest what providers or marketers of pornography in the industry, am I right? I mean, so I think I think again, I always equate it to. I was thinking about it when the way I describe the people, as I say, you know, if I told my wife Molly that I was going to clean the kitchen, I certainly clean the kitchen. I do, but it’s when she cleans the kitchen, it’s a completely different standard, much cleaner. I think we all have that. It’s true. So most people want to eat out of the kitchen that Molly cleaned, not the kitchen that Chris cleaned. So I think that’s what we’re talking about here.
So the great news is good first step of the Vatican. We salute them for that. We think that’s a wonderful first step of the Vatican bank. We know the Vatican Bank has had many, many foibles over the years, but we’re praying for them and it’s a good first step. Over time, hopefully these things will turn into something that is of value and we’re excited about. That doesn’t seem to make sense.
Very much. And this, this continues to be a continuation, as will so accurately described, of showing, showing the, people that they’re hearing the need for it. Catalyst yes, and that’s where this is designing.
Well, I think that’s so true. You know the Vatican came out with a paper a couple years ago. Monsieur Bonum they had a they had a great conversation around it, but there was no action items. Very and it’s difficult. They’re in a tough spot. They have to do it for the whole world. So it’s very difficult. But I think at the end of the day, technology exists today to allow us to screen out any companies giving money to pro abortion organizations, any money coming to the business or pornography or distributing pornography and another other thing, anything of the dignity of the human. Those tools exist, so we encourage people to either find wealth advisors, or work with some advisor who hopefully can get them there or use some of the resources that are available in the marketplace.
Also, a good place is always a good place to plug our book. If people go to Amazon and buy the faith Faithful Finances, which is a book that I wrote Chris McMahon along with Greg, and that book that really showed people. They always say plug your book whenever you get a chance. So this seems like a chance. So if you go to Amazon buy Faithful Finances, that’ll help people build a build a capital or plan or certainly they go into aquinaswealth.com. But we’re excited about what’s happening. We’re excited about that.
Let’s turn our attention to the market. Will, can you give us a 2 minute update pm where the market’s been this year? It’s kind of surprised us so far. How’s it a little bit?
When we sit here this afternoon on Thursday, February 12th, the S&P so far this year is up 70 basis points. Interestingly, the Russell 2000 is up twice that, 5.7% for the year. This is really a further evidence of what we’ve been speaking about for coming up on six months now. But what we’ve been telling our clients, we’re waiting for this broadening out to happen to get away from the magnificent Seven. This is what we kind of predicted to some degree.
Absolutely. You know, we think about what’s been the tech leadership for the last 36 months that we’re really starting to see, you know, other parts, other sectors and parts of the economy really start to participate, which is exactly what I’d expect to go into this year.
So how do we feel, Greg, how do you feel broadly? We feel how we, I think we feel pretty good about last year. Certainly we feel and this year we were hoping, we’re thinking the market adjustment was going to take place. We’ve modified our outlook haven’t we?
We have and especially the new Fed Chair Chris is going to bring a big piece of that into question as we continue to monitor the inflation numbers moving into the second part of 2026. But how quickly does this gentleman cut rates? How does that impact our society from an inflation area and unemployment standpoint? Yes. And where do interest rates go from here? Those are big things that we’re watching with this new Fed chair being put into.
He’s a Trump guy. So will I assume we’re expecting to see some rate cuts? Is that fair? We’ve been calling for two. Does that still seem a fair number to you?
Absolutely. I think President Trump is going to get his rate cuts one way or the other. There were, there was some consternation at the announcement of Kevin Wash thinking that he is quite more hawkish than people thought. But I think the market is, you know, a week on now is coming around, coming around to the idea that he, he will be very sympathetic to rate cuts and I think absolutely two if not more of that later this year.
So as we look at this going forward, we see the market broadening out. We’ve taken the action to support that and that at Aquinas Wealth Advisor certainly brought market broadening out. We don’t see a big adjustment anytime soon and we think we salute the Vatican for this first attempt and we’re excited to see the second, third iterations. This is a as they hope we will fine tune their searches criteria much more exactly.
So that in mind, we’ll pray that God continues to bless you and if we have helped you at Aquinas Wealth Advisors please find us at aquinaswealth.com. Thank you.
Marriage, Money, and Trust