Weeks like this are what we get when Congress spends too much money, and the Federal Reserve is late to slow down the party! Volatility, a little more volatility and finally a dose of reality. A constrained and tight labor market, i.e., low unemployment levels, only adds more fuel to the fire. The CPI Index (inflation / consumer prices paid) continues to show elevated levels, coming in at +8.2% versus a year ago. This is still lower than the June highs of +9% but concerning in that the levels are not dropping like many economists have expected. The latest report initially caused our markets to drop much lower on Thursday morning but rebounded nicely to close the day much higher. This has only added to the overall confusion and finding a true direction is hard to find right now.
So, what does this mean in the near-term? The Federal Reserve will have little choice but to continue raising the base interest rate. The markets have now priced in another 75-basis point increase for November with the possibility of an additional 75-basis point increase in December. In other words, we are likely to see a further total increase of 1.5% between now and December 31st. Wow! What this means for consumers is further pain in the housing, energy, and food segments of our daily lives. My initial takeaway from all of this is frustration, just like you, but our markets are taking this in stride and seem to be withstanding a lot of these headlines for now. We also are keeping an eye on the events unfolding in the U.K. as they embark on a very progressive tax plan. So far, the headlines have rattled their economy and markets in a big way and the events occurring across the pond do have some impact to us here at home.
So, what is good out there right now? Corporate earnings, so far, are showing mixed results. We have been expecting to see much more negative commentary coming from many of the companies that have reported thus far. Don’t get me wrong, it hasn’t been “rosy”, but there are pockets of positivity and something to keep an eye on. Times like this will truly separate the performers from the non-performers. Another bright spot this week was the announcement from the Senior Citizens League, a nonpartisan senior group, that is estimating that the 2023 COLA (cost of living adjustment) could be as high as 8.7% in 2023. That would be the largest increase in 40 years! This could not come at a better time for many of our senior citizens who rely heavily on Social Security payments for their daily living expenses. We still need to wait for official word of this, which could come at any time, but certainly something to feel better about given our current landscape. We are happy to discuss any of these newsworthy headlines with you at any time. As we have all witnessed or experienced in our own personal ways, these can be confusing and frustrating times. Our goal, as your trusted advisors is to help sift through the noise and most importantly, make sure you are on track to achieve the milestones that resonate with you personally.
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
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.