investment management

Market Brief February 22, 2022 – Sloppy Spring?

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management , , , , ,

Is a sloppy spring in store this year? Tax season is underway and it may be a little more complicated this year due to a backlog at the IRS. As we continue to recover from the pandemic’s effects on the economy and our individual finances, you may be facing some complicated situations or a backlog yourself. 

Whatever questions you have, know you’re not going it alone. A problem shared is a problem halved. Together, we can tackle each issue you’re up against – whether it’s concerns about your tax return, an aging parent, or even strategies around how best to save for more of life’s unexpected changes. Even the most complicated situations can be simplified into actionable next steps. And I can be a great resource for you. Reach out and let’s talk about it.

Last Week

The stock market fell last week as the attention changed from inflation to the potential Russian invasion of Ukraine. The geopolitical uncertainty renewed investor interest in safe assets going into President’s Day weekend. The invasion does not necessarily impact corporate profits in the U.S. Therefore, a stock market drop due to the invasion could be viewed as a buying opportunity. For the week, the DJIA was down 1.9%, the S&P 500 was down 1.6%, and the Nasdaq was down 1.8%.

Trading remained volatile and inflation pressure remains. Amid supply-chain crisis and strong demand, January all-items producer price index was up 1.0% m-o-m and up 9.7% y-o-y. Consumer spending remains strong too. On Wednesday, January retail sales surprised with a 3.8% increase from December’s decline. And better than the 2.0% consensus estimate.

Also on Wednesday, U.S. Industrial production rose 1.4% following December’s decline. On Thursday, January housing starts slipped. Permits went the other way, rising to an above-consensus figure, suggesting that the spring building season may be strong. On Friday, existing home sales for January were also strong. Existing home sales were up 6.7% month-over-month, though down 2.3% year-over-year as available-homes inventory remains near record lows. Mortgage rates continued to rise, and new home construction fell 4.1% in January. Resulting from tight labor and materials but permits to build lifted to the highest levels since 2006.

Week Ahead – Sloppy Spring?

The current holiday-shortened data week kicks off today with the Case-Shiller home price index. Economists look for a 1.1% monthly gain. The Conference Board’s Consumer Confidence index expects a decline for February as inflation adds to consumers’ concerns. On Wednesday, the weekly mortgage application report expects to continue the downward trend. Rising interest rates are forcing more would-be homebuyers out of the market. Thursday brings the second (preliminary) estimate of 4Q21 GDP. The report expects the forecast to edge up to 7.0%. Thursday also brings January new home sales, which are expected at an 801,000. On Friday, U.S. durable goods orders and core capital goods orders are both forecast up 0.5% month-over-month. The industrial sector continues pushing out all the goods it can to reach high demand amid the supply chain crisis.

This week marked two years since the pre-COVID-19 market high and the stay-at-home trade may have finally run its course. Many pandemic favorites indicated slowing growth including Shopify, Etsy, and Roblox. Fun investment nugget, Hilton Worldwide is now outperforming Zoom Video Communications since the pre-pandemic market peak in February 2020. Year-to-date index performance; Dow down 6.2%, S&P down 8.8%, and Nasdaq down 13.4% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

Erie CO Financial Advisor; investments, wealth management, retirement income planning; Boulder, Broomfield, Louisville, Niwot, Windsor, Berthoud CO

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief January 31, 2022

jim Financial advisor, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management , , , , ,

U.S. equities rallied late in volatile trading as investors worried over Fed policy, rising interest rates, and high inflation. Investors may be looking for some relief after a bumpy January. This week kicks off another busy week of economic data. Three central bank meetings are on the calendar along with the monthly U.S. jobs report.

inflation

Last Week – Fed & Inflation

Despite wild intraday gyrations in the stock market last week, the S&P 500, the Nasdaq, and the Nasdaq 100 were all basically flat for the week. But at the end of it all, that was an improvement relative to recent weeks. The market saw a huge rally on Friday, with the S&P 500 soaring 2.4%, while both the Nasdaq and QQQs rocketed 3.1% higher. It was the largest daily gain for the “500” since June 2020 and the biggest jump for the other two indices since March 2021.

The stock market finally had a winning week, the first of the year, though January remains deeply in the loss column. Equities are under pressure from inflation, supply chain, Fed decisions, and Covid-19 restrictions. Last week was one of the busiest of the 4Q earnings season. Earnings were overshadowed by the GDP data, which in turn was overshadowed by the Fed meeting. Last Tuesday, the Case-Shiller Home Price index showed unrelenting home-price inflation, with prices up 1.2% month-over-month for November and up 18.3% year-over-year. December new home sales on Wednesday came in at an 811,000 SAAR, topping expectations for 760,000.

The Federal Reserve’s policy statement from last week plus Jerome Powell’s post-meeting press conference made it abundantly clear it is ready to start raising short-term interest rates in March. The futures market is now pricing in 5 rate hikes in 2022, 25 basis points each. Some believe there could be more. This would not be surprising as the Fed is behind the inflation fighting curve. The December Consumer Price Index rose 7% in 2021, the largest yearly increase since 1981.

Week Ahead

The current week mercifully says goodbye to January, which has been the worst opening month for stocks since 2009. On Tuesday, the ISM’s manufacturing PMI is forecast to signal continued expansion. But, at a consensus 57.5 reading for January, this series is likely below the 60 level that prevailed for almost all of 2021. This results from the given current realities of inflation, supply chain, and COVID.

On Tuesday, construction spending is forecast to rise 0.7% for December. The JOLTs job openings for December is forecast to remain north of 10 million. On Wednesday, ADP’s private payrolls report is expected to come in at 225,000 for January. This is down from the prior 807,000 for December. On Thursday, economists will watch initial unemployment claims for signs that Omicron impacts are receding; from a prior 260,000, economists are looking for as few as 230,000 new initial claims. On Friday, January nonfarm payrolls are forecast up by 200,000, in line with December’s 199,000 gain. Unemployment is expected to hold steady at 3.9%. And hourly wages are forecast up 5.2% year-over-year.

Earnings season is under way and announcements expected this week include Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Exxon Mobil Corp, and many more. Year-to-date through Friday; the Dow is down 4.4%, S&P 500 down 7.0% and Nasdaq Composite down 12.0%.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Market Brief January 24, 2022

jim Financial advisor, Investment Management, Market Brief, Market Review, Retirement Income Planning, Retirement Planning, wealth management , , , , , ,
known

A new year, a new tune? So far that is the trend…

With all the speculation around what this year will bring, including the effects of inflation and an ongoing pandemic, whether markets will continue to soar, along with predicting when the Fed may raise interest rates (and how many times), a quote from the late Donald Rumsfeld, former U.S. Secretary of Defense, comes to mind:

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

The idea of known unknowns is helpful in forming your financial strategy. 

What do we know already (known knowns)? 

Are we conscious of what we are not exploring (unknown unknowns)? 

What about biases and unconscious decisions (unknown knowns)?

As this year unfolds and we move into a potentially volatile time in the economy, let’s work closely together, examining your goals and adjusting if needed as conditions change to keep you on track.

Here is a review of last week and what to look forward to this week…

Last Week

The Nasdaq fell 7.5% due to disappointing earnings results. The drop put the Nasdaq below its 200-day moving average for the first time since April 2020. The S&P 500 fell 5.5% and is off 8.25% from its early January highs. Every S&P 500 sector lost ground, with consumer discretionary, technology, and financials all down between 6-8%. Concerning inflation and corporate profits accelerated an overall risk off movement by investors.

Globally, anxieties rose over Russia making a move against Ukraine. In the U.S., a surprise drop into negative territory for January’s Empire State manufacturing survey revealed the economic damage that the omicron variant has done. Weekly jobless claims took an unexpected turn higher, totaling 286K as illness-related absences increased.

Reported housing data came in mixed as mortgage rates ticked up, reaching the highest levels since March 2020. New home construction ended 2021 on a positive note and annual housing starts were the highest since 2006. Homebuilder sentiment slipped slightly in January as lumber prices have soared back to near last summer’s highs, while existing home sales sank 4.6% in December on record low inventory. Overseas, China’s central bank moved to shore up a slowing economy hurt by the real estate sector, cutting several benchmark lending rates. China’s economy grew by 8.1% in 2021, below forecasts of 8.4%.

The Week Ahead

Investor sentiment has been pushed to levels not seen in a long time. The latest AAII survey showed bullish sentiment at 21%, an 18-month low, while bearish sentiment jumped to 47%, a 16-month high. Readings at those extremes may suggest an oversold market in the short term. However, this week is packed with potential big-impact announcements. The largest being the FOMC’s statement to be released mid-day Wednesday. Will Powell change his hawkish tone given recent risk-asset performance, or stay the course laid out in December? Reaction may be volatile either way.

Manufacturing and services PMIs, along with consumer confidence numbers, will precede the Fed’s account. Thursday brings the first look at Q4 GDP, where consensus forecasts have slowly come down and currently sit around 5.3%. Durable goods and pending home sales will also report on Thursday, and then Friday an inflation update lands with the Core PCE Price Index. And don’t forget earnings season is in full swing as 108 names in the S&P 500 are expected to report quarterly results.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Santa Rally & Make Merry This Season

jim Financial advisor, Investing, Investment Management, Market Brief, Retirement Income Planning, Retirement Planning, wealth management , , , , , ,
Santa Rally

Santa Rally or not, we’ve been through a lot in 2021 – more quarantining, hybrid work environments, ups and downs in the economy, and political uncertainty. Chances are, you’ve been so busy adjusting to all the changes while also trying to hold onto family ties and traditions that you’ve had little time to relax and enjoy this special time of year. 

Well, now is your time. Take it. One of the most valuable things you can do in a busy season is to find moments of “me time.” Prioritizing wellness, including in your financial life, and taking time to set your strategy allows you to more generously show up for others and extend goodwill. I can help show you how. So, go ahead, start the timer. Carve out a few minutes for yourself today.

Last Week

Equities moved higher after risks that the Omicron COVID variant would slow down economic activity wanned. The S&P 500 and Nasdaq indexes posted gains over 3%, and Dow was up 4.05% for the week, as volatility fell. The S&P hit a new all-time high on Friday. Every S&P 500 sector was positive. Crude oil jumped nearly 9% to climb back above $70 per barrel. Consumer prices rose 6.8% Year-over-Year and 0.8% Month-over-Month in November. This was the fastest annual pace since 1982, and in-line with expectations. Consumer sentiment rose to 70.4 in December, still lower than a year ago due to higher household inflation expectations.

On the labor front, resignations declined by 4.7% in October. Openings moved back up to 11.03M, up 4.1% Month-over-Month and just below the all-time high. Weekly jobless claims sank to a multi-decade low of 184K. Paychecks and hours worked grew in Q3, but productivity slumped 5.2%, worse than initial reports.

Week Ahead – Santa Rally or Coal to Wrap up 2021

The last full week before the holiday season begins. Will the Santa Rally continue, or finish the year with a lump of coal? This week features four central bank meetings and a host of economic releases. On Wednesday, the FOMC may reveal an accelerated tapering timeline. Markets are already pricing in better than 50% odds of a rate hike by May 2022. More inflation figures are reported with U.S. PPI on Tuesday, followed by CPI from the UK and Canada the next day.

This week also brings the first look at manufacturing and services PMIs for December in the U.S. and Eurozone. China’s monthly data dump will include annual figures for retail sales and industrial production. Other events of note include U.S. retail sales, regional manufacturing updates from New York and Philadelphia, and Australia’s employment account. The week closes with UK retail sales and Germany’s business sentiment information.

Year-to-date index performance; Dow up 17.53%, S&P up 25.45%, and Nasdaq up 21.28% through the close on Friday.

Happy holidays, see you next year!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Omicron Variant and the Impact on Markets

jim Financial advisor, Investment Management, Market Brief, Market Review, Retirement Income Planning, Retirement Planning, wealth management , , , ,
omicron variant

A volatile week sent U.S. equity indexes lower after a disappointing jobs report, dampening Fed comments, and negative Omicron variant news. December kicked off with some fireworks, and the rest of the month looks ready for more volatility as opposed to the seasonal Santa rally investors have come to expect. All three major indexes finished lower for the week; the Dow down 0.76%, S&P down 1.18%, and Nasdaq down 2.6%.

Last Week – Omicron Variant

The S&P 500 recorded its second consecutive weekly loss. The index finished the month of November down 0.83% after rising to record highs early in the month. Equity markets dropped on the announcement of the omicron variant. The variant originated in South Africa but has made its way to the U.S. The VIX volatility index spiked over 100% from an October low to the highest level seen since January of this year.

Fed chair Powell’s Senate testimony surprised markets by implying a potentially quicker path for tapering and eventually rate hikes. Even in the face of the omicron variant. Adding it’s probably time to stop using the word “transitory” to explain the recent surge in inflation. Powell also warned the omicron variant could slow the labor market’s recovery and increase supply chain disruption. The market is currently anticipating one rate hike by July 2022.

Job reports were mixed last week. U.S. private sector job growth was robust in November, with the ADP report coming in above estimates at 534K. On the other hand, the non-farm payroll report disappointed with only a 210K rise in November payrolls. This figure was less than half the estimate, despite the unemployment rate falling more than expected to 4.2%. The 4.2% mark is the lowest since February 2020. The U.S. economy has now recovered 83% of the jobs lost in March and April of 2020.

In other economic news, U.S. ISM Manufacturing PMI ticked up to 61.1 in November. The services PMI recorded another all-time high of 69.1 as strong demand was boosted by supply chain improvements. According to the Conference Board’s report, consumer confidence fell to a 9-month low on rising prices and pandemic concerns. Despite rising mortgage rates, pending home sales jumped 7.5% in October as buyers returned.

Week Ahead

This week the main U.S. events include Treasury auctions, which did not go well the last time around, and the JOLTS job openings report on Wednesday. CPI report comes out on Friday. The market is anticipating a blowout November CPI inflation rate to be announced in the week ahead. The median estimate of 6.7% growth would be the highest since 1982. On the international calendar, China headlines with inflation data and trade balance numbers. US investors will also continue to monitor exposure to China as pressure from Chinese regulators led Didi Global Inc. to make the decision to delist from the NYSE in favor of a Hong Kong listing. Year-to-date index performance; Dow up 12.98%, S&P up 20.83%, and Nasdaq up 17.05% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.