"If you wait at a bus stop long enough, you're guaranteed to catch a bus, but if you run from bus stop to bus stop, you may never catch a bus." Howard Marks
Last week's market recap:
- The S&P 500 was up .39% for the week. Year-to-date the index is down -12.24%.
- Large-Cap Value leads performance YTD at -7.31%
- NASDAQ closed the week up 2.18% and is down -18.72% YTD.
- 10-Year Treasury Rate increased, ending the week at 2.83% from 2.65% the prior week.
- The 1-Year Treasury is yielding 3.27%
- Fed Funds Target rate is 2.50%
The week ahead, 8/8:
- July CPI (Consumer Price Index) INFLATION
- July PPI (Producer Price Index)
Financial markets sit in a peculiar time with investors more likely to cheer on bad economic reports in hopes it’s a sign of peak inflation. For example: Last Friday’s job report was strong, meaning people are employed, which is good. Except the market took it as bad, because more people earning money is inflationary, which means the Fed may have to raise rates higher for longer (be more hawkish). It sounds somewhat like… The Princess Bride: Battles of Wits
Well this week should be less peculiar and more straight forward. Wednesday’s July U.S. inflation print, the Consumer Price Index (CPI) will likely test the recent rally in stocks that has lifted the S&P 500 to multi-week highs.
The benchmark index is up over 14% from its mid-June low, mainly due to expectations that the Fed will be less hawkish than previously anticipated. A higher than expected CPI number could change this narrative. A lower than expected CPI number could support a less hawkish Fed, and continue this summer rally. The Headline CPI consensus estimate for Wednesday is 8.9%, down from 9.1% in June. Will the Fed be satisfied with this week's CPI print? Will the data cause the Fed to ease or accelerate rate hikes?
Below is a chart of the individual components of CPI:
- 2023 Social Security payments are estimated to increase roughly 10%.
- I bonds are currently paying 9.62%.
- Many Californians will start to receive Inflation Relief checks in October. How does that help inflation?
To discuss in more detail, feel free to reach out to us.
CRA Investment Committee
Matt Reynolds CPA, CFP®
Tom Reynolds, CPA
Robert T. Martin, CFA, CFP®
Gordon Shearer Jr., CFP®
Jeff Hilliard, CFP®, CRPC®
Joe McCaffrey, CFP®
Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CRA Financial, LLC [“CRA]), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CRA. Please remember to contact CRA, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. CRA is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of CRA’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.crafinancial.com. Please Note: IF you are a CRA client, Please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your CRA account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your CRA accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Note: Limitations: Neither rankings and/or recognitions by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any professional designation, certification, degree, or license, or any amount of prior experience or success, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if CRA is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (to the extent applicable). Unless expressly indicated to the contrary, CRA did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of CRA by any of its clients. ANY QUESTIONS: CRA’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking.