It was another mixed bag of headlines this week as we continue to monitor the Federal Reserve, corporate earnings announcements, and the prevailing economic headwinds. Our good friend the VIX indicator (volatility index), pulled back slightly after being a little more elevated in recent weeks while the overall rhetoric eased slightly. The major market index averages finished January with one of the best performing months on record. February, however, ended lower which wasn’t a huge surprise. We had discussed the likelihood of this occurring in some of our recent updates and find this to be normal after the strong start to the year. We remain in the “green” for the year and I’ll happily take that for now!
A surge in labor costs and a pullback in jobless claims reported early Thursday point to the likelihood that the Fed will raise its benchmark interest rate another 0.25 percentage point later this month. Again, this is widely anticipated and continues to set the stage for what is likely to be several .25 point increases in the months ahead. It’s still all about “time” right now in my opinion. Time is needed to see the full impact of the moves already made and to see how the current environment responds. The environment in this case being consumers, corporations, and the ultimate flow of money. Atlanta Federal Reserve President Bostic made comments late on Thursday afternoon that he remains firmly in favor of sticking with .25 point hikes for now. The financial markets responded accordingly with a move higher to end the day while providing some relief.
On the consumer front this week, we saw several big retail names like Target, Kohl’s, and Best Buy report earnings. As has been the case recently, it remains a mixed bag of performers and non-performers. Target weathered the holidays better than some while also rightsizing their inventory. In their commentary they specifically mentioned that they are preparing for a further slowdown from the consumer. They are seeing more focus being placed on necessities than discretionary items right now. I don’t think there is any big surprise in those comments, but it does reinforce the idea that certain companies will weather this period better than others. It’s all about managing the balance sheet and inventories in the near-term. A tricky proposition for sure. As we are all experiencing first-hand, managing our own balance sheets, and staying in the “green” is ever challenging. With that little leprechaun guy coming around the corner, being green is cool!
Enjoy your weekend!
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
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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.