The footprints of the Federal Reserve now stand firmly on the back of our financial markets. This was not an easy week to digest in any way, shape, or form. The June market lows are now being retested and where we pivot from here is a true guessing game. I have mentioned in previous weekly updates that there was a high probability we would retest the lows and in typical bear market fashion we are here. There was some hope that a more measured tone would come out of the Federal Reserve after their two-day meeting. However, the language was far from “soft”. Continued increases to the base interest rate appear to be intact. This has certainly spooked things with all sectors of the markets selling off this week. Even the price of gold, a perceived safe haven during volatile bear markets, has hit a 2-year low. As the volatility and overall uncertainty persists, the R-Word (recession), continues to gain traction. At this point, it feels inevitable. Whether it is now or in the near future, much of the pain, we believe, is being priced into our markets today. Keep in mind that much of the information that the Fed is using to gauge their decision making is lagging and the most recent interest rate increase will take some time to price in.
The 3rd quarter is rapidly ending and that means corporate earnings will be a focus again very soon. In general, earnings expectations have already been lowered to some degree, but the question will be raised, is it enough? We will certainly begin hearing more about this topic in the weeks ahead. It is widely believed that forward looking guidance and profitability outlooks will again need to be tampered down and lowered. To some degree, that is also what the Federal Reserve is hoping for. The need to slow inflation, the economy and growth overall is what their current agenda is all about. We know the retail sector has already been impacted as inventories continue to build and demand slows on that end. With the holiday season around the corner, we may indeed see more sale items earlier than previously experienced. I’m willing to bet that we may even see Christmas decorations on display before we dress in our Halloween costumes. Any takers??!!
We continue to monitor our investment holdings and the overall economic headlines closely. Any signs of more positive news are welcome although hard to come by during the last few weeks. The negative sentiment is front and center. I’ve said this before, but I wish the proverbial band aid were ripped off and that immediate irritation dealt with quickly. Over and done. If it were only that simple. Until then, I will enjoy some cooler weather and get pumped for our Shred Event on October 8th from 9am -12pm.
Have a nice Sunday!
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.