Labor Day marks the end of summer and is dedicated to honoring the American labor movement. The first Labor Day celebration occurred on September 5, 1882, in New York City and was organized by the Central Labor Union.
Labor (To)day
What to Expect When You're Expecting (a Rate Cut)
“What to Expect When You’re Expecting” is a book for many first-time parents. My wife and I are preparing for our third child’s arrival in October, a process that has been a mix of excitement and logistical planning. While this is not our first rodeo, the passage of time has certainly brought a fresh set of challenges.
Mixed Signals
After the most aggressive tightening cycle in Federal Reserve history, we are beginning to see signs of a slowing economy and more mixed messaging from corporate America. While counterintuitive, stocks have rallied over 10% from their October lows as inflation looks to have peaked and third quarter earnings have come in better than feared.
Groundhog Day
In recent months, investors have understandably been obsessing over the Fed and inflation. This week was action-packed for the markets, with the Fed meeting and October employment report taking place. Writing about the Fed has come to feel like Groundhog Day…
Where Are the Missing Workers?
One of the most surprising economic impacts of the COVID-19 pandemic has been the changes in the employment market. As highlighted in the chart below, the number of job openings in this country is twice as large as the number of unemployed people. This highly unusual situation defies a simple explanation. [DH1] What happened? Where have the workers gone?
No Blinking in the Tetons
The major event in the capital markets this week took place Friday morning in Jackson Hole, Wyoming. Every year, Federal Reserve Bank leadership meets for a conference to discuss current and future policy. Ahead of today’s meeting, some investors had been optimistic that Powell would soften his stance on the pace of tightening.
Third Quarter 2022 Investment Strategy Video: Balancing Act
Director and Chief Investment Officer George Hosfield, CFA, discusses the Fed raising interest rates, peaking inflation and our view on equities and volatility across all asset classes in our Investment Strategy titled, “Balancing Act.”
Mixed Reviews
This week, there was a plethora of economic and company-specific news for investors to digest. Specifically, the release of first quarter U.S. GDP, reported quarterly earnings by major technology companies and the unanimous vote by Twitter’s board to approve Elon Musk’s offer to take the company private. In response to this news, the market declined 4%, with all of the weekly losses occurring Friday afternoon.
What Really Matters
With an eventful first quarter now in the history books, we can safely say that the elevated levels of volatility that we predicted for 2022 are now in play.
Under Pressure
Our 2022 Investment Outlook features the Superman and Clark Kent theme, a metaphor referencing past extraordinary economic stimulus provided by the Federal Reserve and the U.S. government during the COVID-19 pandemic, as well as the supercharged earnings growth that served as a key tailwind for stocks last year.
Return to Ordinary
In our Outlook 2022 publication titled "Extraordinary to Ordinary" we highlighted that more volatility would be a feature of 2022. Volatility was extraordinarily high in 2020 during the zenith of the COVID-19 crisis and well below average during the robust economic recovery of 2021. This year we expect an environment of more normal volatility.
Under the Hood (of Capital Markets)
Inflation was front and center this week with the release of the December Consumer Price Index (CPI) report. Inflation of 7% Headline and 5.5% Core (ex Food and Energy) were in line with consensus expectations.
Outlook 2022: Extraordinary to Ordinary
The Santa Claus Rally
The holidays are upon us, and at Ferguson Wellman, that means giving thanks, being grateful, staying humble and wishing for the best . And while we take the time to enjoy the festivities, we also keep one eye on the markets to see what lies ahead as the year closes. From now to the end of the year, market participants wait to see what rewards the “Santa Claus Rally” brings.
Omicron Volatility
This week, volatility returned to capital markets due to the recent emergence of the Omicron variant. Initial reports indicate Omicron shows increased transmissibility and mild symptoms, a “mixed bag” of changes over Delta. And while it will be several weeks before we see a more accurate picture of its impact on human health, capital markets immediately responded with increased stock market volatility and lower interest rates.
If You Build It, They Will Come
Last week while my wife was engaging in one of the favorite millennial pastimes of perusing Zillow.com, she blurted out, “Joe, come take a look at this!” At first, I didn’t believe what she was showing me. Our home, which we had purchased only a little more than a year ago, had appreciated a surprising amount according to the estimate.
Not Your Father's Stagflation
Inflation continues to be in the news and is top of mind for clients. This week, the September Consumer Price Index was reported 5.4% over the previous year, an inflation number well above where it was reported prior to the COVID-19 crisis.
Fourth Quarter 2021 Market Letter: Speed Bumps
Soundproof Markets
All eyes were fixated across several facets of policy this week: the U.S. military withdrawal and civilian evacuation in Afghanistan, the much-anticipated bargaining in Congress to pass the budget resolution and lastly Fed Chair Powell’s comments regarding the plans for removing the extraordinary accommodation put in place during the pandemic-induced recession.
Synchronicity
With global governments and central banks providing liquidity at an unprecedented pace, you would expect global growth to be growing synchronously. But, as has been the case from the beginning of the pandemic, the virus and the multitude of government responses to combat the virus have varied from country to country.