I mentioned in my update last week that we could start to see a slow-down in the market momentum that had been created. That certainly has been the case this week. What have we been watching and following this week? A few common themes continue to re-occur and will most likely dictate how we close out the year. The impending questions serious minds want to know: will the economy remain strong enough to avoid a serious recession, will inflation abate as expected, and will corporate earnings while coming in lower, still stay positive overall. A lot of ground to cover in the coming months as more data is released, but certainly “doable” in our opinion. Of course, as we have learned the hard way over the last few years, one simple headline can change it all in an instant. Personally, it feels like we are all walking on eggshells these days and waiting for the proverbial pin to drop and ruin our four-week market gains party!
A new major piece of legislature, the Inflation Reduction Act, was signed into law this past week. We have already seen the attacks from both sides weighing the merits or the lack there of as it pertains to this latest round of governmental attempts to “cool” things down. Our own internal economist has weighed in and I invite you to read the article(click here to view article). As usual, there is little agreement that this will indeed be impactful in the very near-term but there is some evidence that this could help to slowly bring down the deficit in years to come.
More housing data was released over the last week and further signs of a slowdown remain evident. July home sales were down 6% compared to the June numbers and the words “housing recession” are being floated around. Is it really a recession though? I don’t believe that to be the case in my opinion. We all know that prices became unrealistic in many places as the Covid lockdown and low interest rates stimulated spending and lifestyle changes. Home inventory, overall, remains limited and constrained. New construction has slowed in the wake of higher borrowing costs and inflationary pressures. Consumer sentiment has simply changed for now. As the dust settles and the economic fears abate, a normal housing environment will ensue once again. Also keep in mind that new buyers and borrowers are paying nearly double the amount in their monthly mortgage payments from what was possible a year ago. The impact of higher interest rates correlates strongly with the housing market. It always has and always will. As our older clients can attest, this current environment is still historically attractive. Fortunately, many existing homeowners have already refinanced to much lower terms, ensuring that their financial future is on the right path.
I’ve enjoyed spending quality time with many clients over the last few weeks either in person or over phone calls. Our routines and normalcy are returning. It truly seems like we are moving into the next chapters of our lives with a renewed spirit and appreciation for the little things. The stories that we share together are meaningful in many ways. The laughter and the heartache are real and enduring. While we remain a country divided in many ways, the individual perspective each of us has gained over the last several years will carry us to new paths. I am thankful to have the opportunity to walk alongside yours.
Have a wonderful weekend!
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
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.
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.