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Quarterly Review & Commentary
Quarter One · Two Thousand and Twenty Four

Prepared by Darrell W. Jayroe, CFA, CFP®, CKA®



SENIOR PORTFOLIO MANAGER





FOR PROFESSIONAL USE ONLY
Economic Summary
The illusory “soft landing” seems to have actually been achieved!

The U.S. economy has started off 2024 very strong. Initial estimates are that U.S. Real (i.e., inflation-adjusted) Gross Domestic Product (GDP) grew 2.2% (annualized) during the first three months of the year. This comes on the heels of the surprisingly strong 2.5% growth of GDP during 2023. It has become abundantly clear that the imminent recession that had been predicted by so many last year did not happen, is not happening, and will not likely happen in the coming year either. The illusory “soft landing” seems to have actually been achieved!

The lynchpin for the economy’s resiliency is the amazing strength of the labor market and, by extension, the U.S. consumer. The March Unemployment Rate came in at 3.8%, extending its streak to 27 straight months below 4.0%. Average hourly earnings, now at $34.69/hr, have grown by 4.1% over the past twelve months, giving U.S. workers positive wage growth, even after taking into account the impact of inflation. This environment of stable prices and robust employment will continue to provide favorable tailwinds for the spending activity of U.S. households and thereby the overall economy.

Meanwhile, the top economic worry for most people these days continues to be inflation. U.S. consumers are understandably concerned about the increase in overall price levels in recent years, but the pace of the increase in prices (i.e., inflation) has actually been slowing. The most recent Consumer Price Index (February 2024) showed an annual increase of just 3.2%. This is still well above the Federal Reserve’s target inflation rate of 2.0%, but the ninth month in a row below 4.0% and well below the 9.1% level seen in the summer of 2022.

Much to the market’s consternation, the Federal Reserve has been remarkably patient in its deployment of monetary policy towards its dual mandate of 1) full employment and 2) price stability. While the market has been eager for a decrease in the overnight Federal Funds rate, the Central Bank has kept it steady at 5.5%, much longer than anticipated. However, it is quite likely that there will be a rate cut or two by the Federal Reserve sometime this year. Navigating around the November elections will be tricky as there is usually a strong motivation to maintain independence and not to have the appearance of influencing the voting outcome. 

Despite the rosy economic environment, there still remain plenty of reasons for concern, incl. a very contentious political environment, the ongoing conflict in the Israel/Gaza region, Russia’s relentless aggression towards Ukraine, a number of China-related worries, commercial real estate weakness, and the nation’s debt continuing to climb.

Global economies have also enjoyed moderating inflation and respectable growth this past quarter. The employment and interest rate outlooks are less dire than many had expected. However, some of the major geopolitical issues (Ukraine, Gaza, etc.) are closer and therefore even more acute for them. This past quarter, interest rate differentials have favored the U.S. dollar versus foreign currencies (esp. the Japanese Yen). For U.S. investors, the strength of their dollar makes international investment opportunities to be cheaper than they been previously.

Going forward, the Goldilocks economy appears to be continuing unabated, but risks abound, and investors should remain diligent. Long-term goals need to be the primary focus, whatever short-term distractions may materialize.

Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, International Monetary Fund, The Conference Board
Dr. Erik Davidson, CFA
Chief Economic Advisor
DR. ERIK DAVIDSON, CFA is the Chief Economic Advisor for Inspire Investing. Previously, Dr. Davidson served as the Chief Investment Officer for Wells Fargo Private Bank, leading an investment team of over 400 professionals who managed more than $200 billion in assets. Dr. Davidson holds a doctorate degree from the DePaul University’s Kellstadt Graduate School of Business and is a professor at Baylor University teaching behavioral finance.
The Stock Market

The 1st quarter continued the rally that the markets kicked off in the last couple of months of 2023, although the strong momentum of the Small Cap market in the last half of December faded to start 2024. The S&P 500 Index was able to finish the quarter ahead of the Mid Cap index, with both outpacing the International index and the Small Cap Index lagging behind. Investors continued to be optimistic about the economic recovery as fear of higher interest rates seems to be off the table. The S&P 600 Small Cap index ended the quarter with an unimpressive gain of 2.45%, while the S&P 500 and the S&P 400 Mid Cap indexes posted gains of 10.55% and 9.94%, respectively. The S&P International 700 Index exhibited a similar track by starting the quarter in line with the US markets and finishing with a positive performance of 5.88%.

(Source: Bloomberg)

Over the past 12 months, the stock market witnessed a generally positive trajectory across all the major equity indexes. The S&P 500 experienced significant growth during this period, reflecting a strong rebound from the bear market of 2022, turning in a one-year number of 29.86%. Similarly, the S&P 400 and S&P 600, representing mid-cap and small-cap companies, also enjoyed overall gains. The S&P 400 Mid-Cap index posted a one-year return of 23.29%, outpacing the S&P 600 Small Cap index, which returned 15.83% during the same time frame. These indexes benefited from the broader market rally, driven by optimism about economic recovery and hopes that if a recession actually comes in 2024, it will be a relatively “soft landing”. As for the S&P International 700 index, it followed a similar pattern with variations influenced by regional economic factors and geopolitical events, fell short of the US Large Cap market, and slightly underperformed the US Small market with a respectable 12-month return of 15.63%. Overall, the past 12 months exhibited positive market sentiment even while facing continued headwinds of inflation numbers not falling as fast as the markets previously had hoped. Even though we are in the first innings of the new bull market and markets will probably still move higher over the next 12 to 24 months, there is a high probability that we could see some profit taking, which could give us a 10%+ correction during the next few months. If that happens, remain invested and stay focused on the long-term opportunities in a well-diversified global portfolio.

(Source: Bloomberg)

Economic Indicators and Calendars

Inflation - CPI Month over Month Release Date & Time Period Survey Actual
CPI MoM 01/11/2024 08:30 Dec 0.20% 0.30%
CPI MoM 02/13/2024 08:30 Jan 0.20% 0.30%
CPI MoM 03/12/2024 08:30 Feb 0.40% 0.40%
CPI MoM 04/10/2024 08:30 Mar 0.30% 0.40%
CPI MoM 05/15/2024 08:30 Apr
CPI MoM 06/12/2024 08:30 May
CPI MoM 07/11/2024 08:30 Jun
CPI MoM 08/14/2024 08:30 Jul
CPI MoM 09/11/2024 08:30 Aug
CPI MoM 10/10/2024 08:30 Sep
CPI MoM 11/13/2024 08:30 Oct
CPI MoM 12/11/2024 08:30 Nov
CPI MoM 01/11/2025 08:30 DEC
(Source: Bloomberg)

Inflation came in at 0.30% (month over month) in January, beating the expectation of a 0.20% increase, and rose again by 0.40% (month over month) in February, which was in line with expectations. The estimates for the month over month number in March was for an increase of 0.3% but came in at +0.40% when released on April 10th, exceeding expectations by 10 bps. This hotter than expected number is not good as we need to see month over month numbers stay in the 0.0% to 0.20% territory for the next several months so that the CPI year over year number can come back towards the 2 to 2.5% level over the next 12 months.

(Source: Bloomberg)
Economic Growth Release Date & Time Period Survey Actual
GDP 01/25/2024 08:30 4Q A 2.0% 3.3%
GDP 02/28/2024 08:30 4Q S 3.3% 3.2%
GDP 03/28/2024 08:30 4Q T 3.2% 3.4%
GDP 04/25/2024 08:30 1Q A
GDP 05/30/2024 08:30 1Q S
GDP 06/27/2024 08:30 1Q T
GDP 07/25/2024 08:30 2Q A
GDP 08/29/2024 08:30 2Q S
GDP 09/26/2024 08:30 2Q T
GDP 10/30/2024 08:30 3Q A
GDP 11/27/2024 08:30 3Q S
GDP 12/19/2024 08:30 3Q T
(Source: Bloomberg)     (A= Advance; S= Second: T= Third)

GDP growth came in stronger than the initial expectation of +2% for the 4th quarter, with an actual +3.3% growth rate for the quarter in the Advance Release and, although being revised downward to 3.2% for the Second release, came in at 3.4% with the Third revision slightly higher than the initial release. The debate among economists and market pundits continued during the 4th quarter as to “how deep will the recession be,” even though there has been no definite proclamation of a recession for the past two years that it has been expected.  

According to the Bloomberg survey, the probability of a recession has dropped from 65% in July to only 40% currently. The yield curve (10s—2s) remains inverted; note that a recession is often called shortly after the inversion corrects.

Labor Market Release Date & Time Period Survey Actual Revised
Unemployment Rate 1/5/2024 8:30 Dec 3.8% 3.7%
Unemployment Rate 2/2/2024 8:30 Jan 3.8% 3.7%
Unemployment Rate 3/8/2024 8:30 Feb 3.7% 3.9%
Unemployment Rate 4/5/2024 8:30 Mar 3.8% 3.8%
Unemployment Rate 5/3/2024 8:30 Apr
Unemployment Rate 6/7/2024 8:30 May
Unemployment Rate 7/5/2024 8:30 Jun
Unemployment Rate 8/2/2024 8:30 Jul
Unemployment Rate 9/6/2024 8:30 Aug
Unemployment Rate 10/4/2024 8:30 Sep
Unemployment Rate 11/1/2024 8:30 Oct
Unemployment Rate 12/6/2024 8:30 Nov
Unemployment Rate 1/5/2025 8:30 Dec
Nonfarm Payrolls (Change) 1/5/2024 8:30 Dec 170k 216k 182k
Nonfarm Payrolls (Change) 2/2/2024 8:30 Jan 196k 353k 290k
Nonfarm Payrolls (Change) 3/8/2024 8:30 Feb 198k 275k 356k
Nonfarm Payrolls (Change) 4/5/2024 8:30 Mar 210k 303k 270k
Nonfarm Payrolls (Change) 5/3/2024 8:30 Apr
Nonfarm Payrolls (Change) 6/7/2024 8:30 May
Nonfarm Payrolls (Change) 7/5/2024 8:30 Jun
Nonfarm Payrolls (Change) 8/2/2024 8:30 Jul
Nonfarm Payrolls (Change) 9/6/2024 8:30 Aug
Nonfarm Payrolls (Change) 10/4/2024 8:30 Sep
Nonfarm Payrolls (Change) 11/1/2024 8:30 Oct
Nonfarm Payrolls (Change) 12/6/2024 8:30 Nov
Nonfarm Payrolls (Change) 1/5/2025 8:30 Dec
(Source: Bloomberg)

The Unemployment rate rose to 3.9% in February after staying at 3.7% in December and January. In March, we saw the unemployment rate drop back to 3.8%, meeting expectations. It is still possible we could see unemployment rise above 4% in 2024 as the economy slows and if layoffs increase; however, with so many jobs still open and unfilled in the US, it may take some time before those laid off add to the unemployment rolls.

Nonfarm Payrolls continue to have solid monthly numbers, with March coming in at 303k new jobs, which is much stronger than the estimates of 210k. If job growth remains this strong in the face of a potential recession, the Federal Reserve will not be inclined to cut interest rates as soon as some analysts are predicting. We are now discounting the possibility that there will be no interest rate cuts in 2024.

Monetary Policy - Federal Reserve Meeting Date Rate Decision (%) For Against
FOMC Meeting 01/31/2024 0.00 12 0
FOMC Meeting 03/20/2024 0.00 12 0
FOMC Meeting 05/01/2024
FOMC Meeting 06/12/2024
FOMC Meeting 07/31/2024
FOMC Meeting 09/18/2024
FOMC Meeting 11/07/2024
FOMC Meeting 12/18/2024
(Source: Bloomberg)

The Federal Open Market Committee left the Federal Funds rate unchanged during the first two meetings of 2024 as no one believes there will be any further interest rate increases in this cycle. Based on Chair Powell’s recent comments, we should not be surprised if we don’t see a rate cut until later this year, if at all, as he has reiterated that they will remain data-driven. The data shows a stronger than expected economy, although many analysts fully expect the rate cut cycle to begin before the end of 2024. As the Federal Reserve was late to start raising interest rates, it is highly likely that they will be late to cut interest rates as the economy starts to slow, causing unnecessary damage to the economy in their efforts to avoid sparking more inflation.

(Source: Bloomberg)
Inspire 100 ETF [NYSE: BIBL]
  • BIBL outperformed the S&P 500 Index by 115 bps for the quarter, with returns of 11.70% and 10.55%, respectively.  
  • BIBL’s outperformance relative to the S&P 500 index is partially due to its strong performance in the Consumer Discretionary sector, which returned +16.31 % compared to the sector return in the benchmark, which was only 4.99%.
  • The exposure to smaller companies in BIBL in the Financial Sector also helped the fund’s performance in relation to the S&P 500 during the quarter. The fund was up 20.86%, compared to the sector in the index, which was up only 12.46%.
  • We believe that as the new bull market gains momentum, BIBL is well positioned to continue outperforming the S&P 500 due to its tilt to the smaller side of the market cap spectrum and its strong core positioning, which benefits from both value and growth exposure.
(Source: Bloomberg)
Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P 500 is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. The Inspire 100 Index is a rules based, passive index which tracks the stock performance of the one-hundred highest Inspire Impact Scoring companies in the United States with market capitalizations above $13B. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investoror’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.42%. Net expense ratio for the fund is 0.35%. The Fund’s adviser has contractually agreed to reduce fees and/or absorb expenses until at least March 31, 2023.
Inspire Global Hope ETF [NYSE: BLES]
  • BLES underperformed the S&P Global 1200 index during the 1st quarter with a return of only 5.64% vs 9.00% for the global index.
  • With the disappointing performance of the International markets in relation to the US Large Cap market during the 1st quarter, BLES diverged from the global index for the quarter in a negative way.
  • It appears that the underperformance of BLES to the global index is attributable to strong underperformance in the African and Middle Eastern regions as well as weaker performance in Western Europe and the Asia Pacific regions.
  • We believe the tilt to the smaller end of the large cap spectrum of BLES will show favor as the economic numbers continue to improve over the next 6 to 12 months.
(Source: Bloomberg)
Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P Global 1200 Index is a free-float weighted stock market index of global equities from Standard & Poor’s. The index covers 31 countries and approximately 70 percent of global stock market capitalization. Inspire Global Hope Large Cap Equal Weight Index tracks the stock performance of 400 of the most inspiring large cap companies from around the globe. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.49%.
Inspire Fidelis Multi Factor ETF [NYSE: FDLS]
  • FDLS underperformed the MSCI All Country World ETF by -411 bps and underperformed the S&P 500 Index by -646 bps. After a weak start to the quarter, FDLS climbed during the last two months to peak in late March and finish with a quarterly return of only 4.09%.
  • The equal weight exposure to different stocks in relation to the market cap weighted S&P 500 during the quarter was the main contributor to the underperformance for the 1st quarter.
  • We continue to believe that the globally diversified allocation of FDLS to U.S. large, mid, and small cap, international and emerging markets stocks, as well as the disciplined multi-factor approach, will be a good complement to our other ETFs as the new bull market gains momentum but will not always be in favor relative to the broad markets.

Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P Global 1200 Index is a free-float weighted stock market index of global equities from Standard & Poor’s. The index covers 31 countries and approximately 70 percent of global stock market capitalization. Inspire Global Hope Large Cap Equal Weight Index tracks the stock performance of 400 of the most inspiring large cap companies from around the globe. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.49%.
Inspire Momentum ETF [NYSE: GLRY]
  • GLRY continued the strong upward ‘momentum’ from the rally that started in the 4th quarter of 2023, which saw broad markets break out from the correction. GLRY outperformed the S&P 400 Midcap index to start 2024 strong, ending the quarter up +13.05% versus +9.94% for the index.
  • 2023 was a rollercoaster ride for investors, especially those outside of the Magnificent Seven or market-weighted indices. Q1 was a market for securities that didn’t participate as much in earlier bullish moves, and investors in midcap space saw high single or even double digit returns in the past three months.
  • The rally has been tied to the view that the FED would cut interest rates sooner, which is historically good for equities and even more so small to midcap companies. Our expectation for 2024 is that market movement will be highly correlated to FED intent and then action (or inaction). We want to remain nimble in any environment, as a correction could come if the FED telegraphs that the interest rate cuts will be further down the road than expected.
  • Looking ahead, the methodology has not changed, and we will continue looking for great companies using the FEVRR methodology. We will find companies that have strong financial health and sustainable earnings, which allows them to make strategic decisions in a similar or lower rate environment. We will also find companies that have attractive valuations and price momentum, which assists with entry and exit points.
(Source: Bloomberg)

Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P SmallCap 400 Index measure the mid cap segment of the U.S. equity market. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 1.02%. Net expense ratio for the fund is 0.80%. The Fund’s adviser has contractually agreed to reduce fees and/or absorb expenses until at least March 31, 2023. 
Inspire Small/Mid Cap ETF [NYSE: ISMD]
  • ISMD outperformed the S&P Small Cap 600 Index by 199 bps but underperformed the S&P Midcap 400 Index by 551 bps for the 1st quarter, giving ISMD a total quarterly return of only 4.44%.
  • The mid-cap markets continued the strength of the previous quarter to start 2024 with momentum similar to the US Large Cap market, but the US Small Cap market gave up the momentum that led all markets to end the 4th quarter of 2023 to lag all other markets so far in the new year.
  • The equal weighting of the 500 stocks in ISMD was in line with the market cap weighted small and midcap indexes, showing that the correlation in the small and midcap markets and ISMD remains strong.
(Source: Bloomberg)
Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P Small Cap 600 Index measure the small cap segment of the U.S. equity market. The Inspire Small/Mid Cap Impact Equal Weight Index tracks the stock performance of 500 of the most inspiring small and mid cap companies in the U.S. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.48%.
Inspire Tactical Balanced ETF [NYSE: RISN]
  • RISN returned +7.89% in the first quarter on a total return basis, outperforming the S&P Target Risk Moderate T.R. Index benchmark, which returned +3.08%.
  • We attribute this quarter’s performance to our continued elevated allocation to equities, which began in July and remained through the first quarter. We increased the equity allocation to approximately 80% and have remained at that level. The overall U.S. stock market experienced a considerable increase in value in the first quarter, buoying our equity position for the period.
  • Additionally, our improved screening criteria that we use to select the stocks within the equity allocation of the fund that focuses on Large Cap, biblically aligned stocks with good historical revenue/profit growth, low debt, high returns on invested capital that are selling at a lower P.E. ratio compared to their historical average has proven beneficial, and we will continue using this method for the foreseeable future.
  • We continue to hold short term floating rate government bonds as the “defensive” position for the 20% of the fund that is not allocated to equities, and plan to remain here until it looks like the FED begins to lower short term rates.

—Jacob Chandler, Manager  

(Source: Bloomberg)
Performance data as of
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. You cannot invest directly in an index. The S&P Target Risk Moderate Index is designed to measure the performance of moderate stock-bond allocations to fixed income while seeking to increase opportunities for higher returns through equities. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.71%.
Inspire International ETF [NYSE: WWJD]
  • WWJD was up only 1.76% in the 1st quarter, underperforming the S&P International 700 TR Index return of 5.88%, a disappointing underperformance of -412 basis points.
  • It appears that the underperformance of WWJD to the International index is attributable to strong underperformance in the Africa and middle east region as well as weaker performance in Western Europe and the Asia Pacific regions.
  • Being highly correlated with the index during most of the quarter shows that the diversification of the fund with only 200 positions is well positioned to compete against the international index with 700 positions in the coming year.
  • We remain confident that the discipline of the fund should allow for outperformance of WWJD in the coming year as it is equally weighted, and the index is market cap weighted.
(Source: Bloomberg)

Performance data as of
3/31/2024
. You cannot invest directly in an index. The S&P International 700 measures the non-U.S. component of the global equity market through an index that is designed to be highly liquid and efficient to replicate. The Inspire Global Hope Ex-US Index intends to track the price movements of a portfolio of 200 of the most inspiring, biblically aligned large cap companies outside of the United States. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.69%.
The Bond Market

Yields Rose Sharply—The yield curve reversed its most recent course and rose across the rate spectrum, giving the fixed income markets relatively flat quarterly returns. Interest rates from the 3-month to 30-year maturities all increased in the first quarter, as the Federal Reserve gave mixed signals that although they have completed their policy of raising interest rates, they are still not confident about when interest rates could start falling.

As of the end of the 1st quarter, the 3-month T-Bill yield rose from 5.344% to 5.371% vs the 10-year U.S. Treasury, which jumped by over 32 bps from 3.88% to 4.201%.

The 2-year U.S. Treasury yield spiked from 4.251% to 4.621%, a 37 bps increase, as the 5-year yield went up from 3.848% to 4.213% (an increase of over 36 bps), and the 30-year treasury saw a rise from 4.029% to finish the quarter at 4.344% (an increase of over 31 bps).

The probability of a recession has moderated as the economy has not slowed as much as expected, and the employment numbers and consumer spending remain strong. Although a recession is probably avoidable, the estimate remains around 40%, according to the Bloomberg survey results.

Source: Bloomberg 3-28-2024
Inspire Corporate Bond ETF [NYSE: IBD]
  • IBD was up only 0.05% in the 1st quarter, slightly underperforming the fixed income benchmark of the Bloomberg Barclays US Intermediate Credit Index, which was up only 0.20% as well.  
  • The unexpected and dramatic increase in the yield curve brought negative to flat performance for intermediate bonds in Q1 as well as the longer end of the yield curve.
  • With the high probability of the Federal Reserve having completed its process of raising interest rates over the past two years, it is possible that the yield curve could shift in a parallel fashion to the downside in the 2nd quarter, allowing for a return to positive performance during the next 3 to 6 months.
(Source: Bloomberg)

Performance data as of
3/31/2024
. You cannot invest directly in an index. The Bloomberg Barclays US Intermediate Credit Index measures the performance of investment grade, US dollar-denominated, fixed-rate, taxable corporate and government-related debt with less than ten years to maturity. The Inspire Corporate Bond Impact Equal Weight Index is comprised of 250 investment grade, intermediate term corporate bonds issued by some of the most inspiring large cap “blue chip” companies in the United States. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.inspireETF.com. Total annual operating expenses are 0.44%.
Things to Watch

Inflation, Money Supply, and Central Bank Response

The February CPI month-over-month reading was 0.4%, which was in line with expectations. Year-over-year inflation is up to 3.2%, given the recent increase in energy prices. Based on Chair Powell’s recent comments, we have reached a terminal level of interest rates around 5.5%, which are expected to fall starting in mid-2024. Many investors believe that the inflation scare is well behind us. However, core inflation remains high at 3.8% and well above the Fed’s target of 2.0%, so we will likely see a slower lowering of interest rates than investors initially thought. We will continue to closely monitor monthly inflation readings and the Fed’s response, as this will continue impacting capital market returns and volatility in the months and years ahead.  

GDP, Yield Curve, Employment, & Consumer Confidence

The final fourth quarter GDP figure came in at 3.4%, beating the consensus of 2.0%. This was another strong quarter, driven by consumer spending; however, we believe we are/will be in a trend of slowing growth, which could get worse, especially if personal consumption, business investment, and home building continue to slow/decline going into 2024. In addition, the yield curve remains inverted (which generally occurs leading up to a recession), and the Conference Board’s leading index has never declined this much in six months without a recession. We have now had over 630 consecutive days of yield curve inversion, the longest on record. With inflation still running high and the labor market remaining strong, the Fed may be forced to keep rates high to try to bring down inflation, or at least keep them higher than investors believe. Therefore, the risk of a recession occurring in the next few quarters remains on the table. We will continue to keep a close eye on growth figures going forward.

Geopolitical Risks

The global capital markets continue to face several geopolitical risks in 2024, which could significantly impact investor sentiment and market stability. One key concern is the ongoing war in Israel and the Middle East against the terrorist proxies of Iran in Hamas, Hezbollah, and the Houthi rebels. Although this has not caused a disruption in the oil supply from the Middle East yet, that could change if the conflict spreads due to increased belligerence from Iran. The Russia/Ukraine war appears to have reached a stalemate, but neither side is showing any willingness to negotiate an end to the fighting yet. Political conflicts with China can also introduce instability and raise concerns about the business environment in the next several months. The heated political environment here in the US is also something to consider as everyone shifts their attention to the presidential election in November. This could result in increased market uncertainty, fluctuations in stock prices, and the need for us to closely monitor global and domestic developments and assess their potential impacts.

Closing Remarks

The markets are flashing signals that we fully into the first leg of the new bull market and are glad to see good positive performance this past quarter. Although we don’t like to see a negative quarter, that does happen periodically, even during the first stages of a new bull market. We will not be surprised to see some profit taking during the second quarter, bringing us a fairly normal correction of -10% or more in the next few months. However, if this does happen, it would not change our conclusion that the new bull market is in the early innings. As we are still facing the same headwinds from the last couple of years – inflation, high interest rates, war in Ukraine, war in Israel and an upcoming presidential election– we need to remain patient and focused on long term opportunities.

Whatever may come, our Lord is still in control. We remain thankful for the provision, protection, and blessings that we receive from our Heavenly Father and are looking expectantly to what God has in store for the rest of 2024 and beyond.

We thank each of you for bringing Glory and Honor to our Heavenly Father and our Savior Jesus Christ as you serve your clients through Biblically Responsible Investing.

Darrell W. Jayroe, CFA, CFP®, CKA®
Senior Portfolio Manager
Darrell Jayroe, CFA, CFP, CKA, serves as Inspire’s Senior Portfolio Manager responsible for leading the firm’s Investment Committee, as well as serving as Lead Portfolio Manager for Inspire’s ETFs and SMA strategies. Darrell has been with the firm since 2016. Prior to joining Inspire, Darrell was a Vice President and Sr. Portfolio Manager for the Bank of Oklahoma trust department for 12 years where he was responsible for managing accounts for high net worth families, trusts, foundations and institutions. Darrell started his career as an investment advisor in 1994 with PaineWebber in Oklahoma City. Darrell received a B.A. and Masters degree from Southern Nazarene University in Bethany, Oklahoma. He is a CFA (Chartered Financial Analyst) charter holder and is a CFP® (Certified Financial Planner®) licensee. He is a member of the CFA Institute and a member and Past President of the CFA Society of Oklahoma. He is also a member of Kingdom Advisors and holds the CKA® (Certified Kingdom Advisor®) designation. Darrell and his wife, Beth, have been married since 1982 and have two daughters, a son in law and three grandchildren.
There is no guarantee that the Funds will achieve their objective, generate positive returns, or avoid losses. Before investing, consider the funds’ investment objectives, risks, charges and expenses. To obtain a prospectus which contains this and other information, call 877.658.9473, or visit www.inspireetf.com. Read it carefully. The Inspire ETFs are distributed by Foreside Financial Services LLC., Member FINRA. 

Inspire and Foreside Financial Services LLC are not affiliated. 

ETF shares are not redeemable with the issuing fund other than in large Creation Unit aggregations. Instead, investors must buy or sell ETF Shares in the secondary market with the assistance of a stockbroker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. The NAV of the Fund’s shares is calculated each day the national securities exchanges are open for trading as of the close of regular trading on the New York Stock Exchange (“NYSE”), normally 4:00 p.m. Eastern time (the “NAV Calculation Time”). Shares are bought and sold at market price (closing price) not NAV. Market Price returns are based upon the official closing price on the listing exchange (NYSE ARCA) at 4:00 p.m. ET when NAV is normally determined for most Inspire Funds, and do not represent the returns you would receive if you traded shares at other times.

An active secondary market for the Fund’s shares may not exist. Although the Fund’s shares will be listed on an exchange, subject to notice of issuance, it is possible that an active trading market may not develop or be maintained. There is no guarantee that distributions will be paid. 

Investment advisory services offered through Inspire Investing, LLC, a Registered Investment Advisor with the SEC. 

National Admin Office: 3597 E Monarch Sky Ln, Suite 330 Meridian, ID 83646; Phone: (877)658-9473; Email: admin@inspireinvesting.com 
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Note: Giving can and does change to meet changing ministry needs. Total lifetime giving $243,372 as of 12/31/23.

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