Every market valuation is a number from today multiplied by a story about tomorrow. – Morgan Housel
Last week's market recap:
- The S&P 500 closed the week up 4.75%. Year-to-date the index is down -20.25%.
- Large-Cap Value leads performance YTD at -13.25%
- NASDAQ closed the week up 5.22% and is down -30.16% YTD.
- Barclays Aggregate Bond index is down -16.62% YTD
- 10-Year Treasury Rate increased, ending the week at 4.21% from 4.02% the prior week.
- Fed Funds Target rate is 3.25%
- The 1-Year Treasury is yielding 4.61%
- A 6 Month Treasury is yielding 4.50%
- What is your savings account rate? If it didn’t increase recently, you may want to find a new savings account.
The week ahead:
- Busy Earnings Week
- PCE Price Index (Inflation)
- GDP Report
- Housing Data
The S&P 500 rallied 2.37% on Friday. It was sparked by a Wall Street Journal article titled, “Fed Set to Raise Rates by .75 Point and Debate Size of Future Hikes.” It was written by Nick Timiraos, aka “The Fed Whisperer.” When Nick Timiraos speaks, the market listens.
Markets hate uncertainty. Data releases and events over the next few weeks should lift some this uncertainty and provide a clearer picture of the outlook.
- GDP Report: This could show surprising strength; however, real GDP could easily contract in both the fourth and first quarter as the Fed’s rate hikes filter into the system.
- Personal Consumption Expenditures (Inflation data without food and energy) We may see a month over month increase; however, there may be much softer numbers ahead. Data is showing an easing of supply chain problems, inventory builds, and lower commodity prices.
- Next week’s data on Job openings and employment. A big focus will be on wage gains. Average hourly earnings seem to be growing slower than consumer prices. This trend could help slow inflation pressures.
- Earnings: Many major companies are reporting earnings this week. We’ll get a clearer picture of the health of corporations.
- Mid-term elections: Republicans are expected to control the House. Senate race is too close to call. If Republicans control even one house of Congress, fiscal gridlock would be the likely outcome. That means no major tax or spending policy changes until after the next presidential election.
- Fed Meeting on Nov 2nd: 75bps hike is expected. The Fed’s signaling on its December move is extremely important. Right now, the Fed Futures market is pricing in a 44% chance of another 75bp hike in December.
While the data coming in over the next few weeks may not all be market friendly, eliminating some of the uncertainty should be a positive on its own.
As always, let us know if you have any questions.
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.