Welcome to the Fall season? With temperatures hovering in the mid-90s here in the Mid-Atlantic, it hardly feels like Fall is anywhere close to being near. The heat seems to be sticking around for now, just like the “heat” the Federal Reserve is facing as its September meeting draws closer (September 19-20). With only three Federal Reserve meetings left on the calendar for 2023, the expectations for “will or won’t they” raise rates one more time remain unclear. Personally, I believe the job is complete and they can pack up for the balance of the year and watch the chess game play out. But I will not be surprised if they skip the September meeting and leave rates as-is before putting one more nail in the coffin come November 1st. There always seems to be the need to overstep and finish off with a proverbial bang. This playbook by the Fed has existed for a long time so why change now?!
As we move into the later stages of 2023, many are asking where will we end up for the year? The stock market rally has caught many investors off guard, with mountains of excess cash sitting in money market funds. The next question for Wall Street could be whether or not that money will kick prices higher again after an August slump. It is believed by some that the recent 2nd quarter earnings, while a little more “mixed” in results than expected, will have been the low point of the year when it comes to corporate profits. This is all based on the changing expectations from Wall Street Analysts, who have been revising their estimates higher for the remainder of the year. Another factor that could help push this idea into motion rests on the current record levels of cash sitting on the sidelines. “Money market fund assets have ballooned by more than $925 billion year to date, Bank of America said in a report Friday, citing EPFR Global, as higher interest rates have created juicy yields of 5% or more. Total assets in money market funds are now above $5.5 trillion, according to the Investment Company Institute.” I can speak to the validity of this idea firsthand. We have personally seen more cash placed in money markets and Treasuries than at any point in the last 10+ years. As the economic uncertainty calms down and interest rates stabilize, that idled cash will find its way into the stock market. Don’t get me wrong, it is very reassuring to finally see 5%+ yields in investments that have seemed untouchable for some time, but the opportunity to exceed that performance is still dangling out there. When the stock market returns are higher and confidence comes back, those dollars will shift course again and more risk will be placed on the table. That fact has stood the test of time.
We have exciting news to share with everyone! Kaitlyn Rothaus Moser joined our team this week as a Client Support Specialist. She comes to us with over a decade of experience in higher education and secondary education administration. She holds a Master of Science in Education degree in Higher Education and Student Affairs from Baylor University and a B.A. in English. Kaitlyn has long been interested in the world of personal finance and is beginning studies to become a CFP. If you catch her outside of work, Kaitlyn is likely playing board games with her husband, reading the latest fiction novel on her shelf, or spending time with her rescue dog, Oliver. We have been fortunate to be able to continue building upon the pillars that my mother-in-law, Ann, constructed many years ago. With the support of our wonderful clients (and a strong stock market!) we look forward to what the balance of 2023 and beyond will bring us.
Have a great weekend!
https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.