his week, Oregon residents experienced the first taste of fall. Evenings, once long and balmy, gave way to early, crisp sunsets. Leaves, damp from evening rain and morning dew, began dropping from trees. Pumpkins appeared on porches to greet the trick-or-treaters that would soon walk door-to-door. Lastly, capital markets demonstrated similar signs of change with company earnings announcements and macroeconomic data reports, ending a fairly quiet week by setting the stage for more significant releases of information in the coming weeks and months. Surely, fall is upon us.
Labor (To)day
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.
Win Sahm, Lose Sahm
Over the last week, investors and market watchers were introduced to a relatively unknown economic indicator, the Sahm Rule. As highlighted by Google search data, interest in the indicator spiked last week.
The Devil (and Dove) Are in the Details
Last week, over 28 million unique viewers tuned into the Games of the XXXIII Olympiad opening ceremony in Paris, France, double the combined state populations of Oregon, Washington and Idaho. The ceremony set the stage for the coming weeks of competition and allowed viewers to catch their first glimpses of the best athletes in the world. This week, investors were focused on a different stage: the Federal Open Market Committee (FOMC) press conference, which offered insight into the Fed’s future perspectives on inflation and employment.
Mega-Cap Earnings in Focus
The U.S. stock market saw a rebound the last couple of weeks, breaking the prior three-week losing streak. The S&P 500 gains were driven by mega-cap names due in large part to their recent earnings results which exceeded investors’ expectations.
Productivity = Prosperity
By March, our feelings of excitement for a new year have generally worn off and we have settled into our winter routines. The hope of an early spring and longer days are normally what carries us through the season, but this year, more excitement is brewing.
”Is It Over Now?”
Over the last several weeks, company layoffs have been in the headlines, specifically in the technology sector.
Just More of It
It was an action-packed week in the capital markets headlined by the Federal Reserve’s first meeting of 2024. The central bank decided to leave their benchmark interest rate unchanged at a 23-year high – a level at which it has been since July of last year.
Strong Start
The final data points of 2023 are trickling in, and investors are using this information to inform their opinions on what is expected in 2024. Starting this month, we have begun to share our 2024 Investment Outlook with clients and professional partners – we look forward to having the opportunity to be together and celebrate what’s to come.
Mixed Signals
Spooky season was in full force this week with contradictory messages from the economy versus the stock market. The week was chock-full of news with over 40% of the S&P 500 market capitalization reporting third quarter earnings, the release of third quarter economic growth, and finally, fresh data on the Fed’s preferred measure of inflation, the Personal Consumption Expenditure Index.
Investment Strategy Video: Inflation's Flame Flickers
George Hosfield, CFA, discusses Ferguson Wellman's quarterly strategy titled, "Inflation's Flame Flickers," which addresses the narrow market leadership, the impact of higher interest rates on inflation and how assets are priced at this stage of the economic cycle.
Third Quarter 2023 Investment Strategy Video: Standing Eight Count
The Labor Market Holds the Key
The lead story from the stock market this year may well be the outperformance of a narrow and select group of technology companies, however the leading economic story this year may be the surprising resilience of the U.S. economy in the face of the Federal Reserve’s concerted effort to rein in growth via higher interest rates.
Slowing Progress
Inflation has been the most watched economic data point for the past two years. On Wednesday, we received inflation data for the month of April. The headline Consumer Price Index (CPI) increased by 0.4% compared to the prior month and 4.9% compared to the year-ago period. 4.9% compares to economist expectations for an increase of 5.0%, equal to the 5.0% increase seen in March.
Market Letter: Stalemate
Investment Strategy Video: Stalemate
George Hosfield, CFA, discusses the firm's quarterly strategy titled "Stalemate," which highlights the Fed's ongoing battle to tame inflation along with our views on the health of the banking industry and capital market expectations for the balance of the year.
March Madness Started Early This Year
One year ago this week, the Federal Reserve raised interest rates for the first time since the pandemic began. After two years of holding rates near zero, this first hike to combat rising inflation only raised the policy rate by a mere 0.25%.
Summer of '69
While we continue to see a daily deluge of headlines highlighting layoffs in the tech space, the rest of U.S. labor market appears fairly resilient. This morning, the Department of Labor released the monthly jobs report and what was quite unexpected was the gain of over 500,000 new jobs. This brought the unemployment rate down to 3.4%, the lowest since May of 1969.
JOLT to the Job Market
Jerome Powell has the most difficult job in America. The Fed Chairman and the Federal Reserve Open Market Committee are tasked with lowering inflation and they primarily have only one blunt tool to accomplish this goal, adjusting interest rates.
Third Quarter Earnings Season Kicks Off
U.S. stocks ended higher this week as investors digested news of solid corporate earnings against a more hawkish-than-expected Fed and better-than-expected labor data. Throughout the year, rising rates and macroeconomic headwinds overwhelmingly pressured asset prices and valuations, even for companies that have demonstrated earnings resilience.