Happy Halloween to all you ghouls and goblins! Fun fact: Halloween’s origins can be traced back to the ancient Celtic festival of Samhain, which was a celebration to remember the dead and departed on the eve of All Saints Day (November 1st). These festivals and days of remembrance remain widely celebrated in many religions and cultures throughout the world. I suggest you get out and about and enjoy some fall weather this weekend. Winter is coming!
A lot of attention was placed on corporate earnings this week as a vast majority of large cap and mega cap technology stocks reported third quarter results. There certainly is no shortage of “high and lows”, as spending trends and forward guidance remain in focus. A common theme now seems to be centered around consumer and corporate spending levels moving forward. Several of the largest, global companies (Amazon, Microsoft, and Google) broadcasted corporate spending concerns as the economy teeters on a recessionary tightrope heading into 2023. While the corporate world has clearly pulled back the reigns on spending, the consumer continues to trudge along. What is unclear, however, is how long will or can this last? Are we simply playing ostrich, with our heads in the sand? The strain being placed on our wallets is real and the longer this inflationary period lasts the less likely we are to see that soft landing we have been hoping for.
In the face of this we are feeling some positive vibes coming from the markets overall. Several Federal Reserve members seemed to posture a potential willingness to indeed take a pause on aggressive interest rate increases as we head into 2023. This helped give our markets a boost throughout the week. Another positive data point came in the GDP numbers released on Thursday morning. The U.S. economy posted a positive GDP number for the third quarter, coming in at +2.6% vs. estimates of +2.3%. This is the first positive GDP number for the year after starting off with two negative quarters. A large portion of this growth was due to a narrower than expected trade deficit which is expected to be a one-off occurrence and unlikely to be repeated in the future. While this may seem reassuring in the near-term, expectations for more GDP weakness going forward are widely expected. The heavy weight of the current inflationary environment will likely prevail for several more months as the Federal Reserve continues to work on reeling things in.
I heard a phrase this week that has stuck with me. The “old economy” is helping to prop up the “new economy”. The old-line, blue-chip companies our parents relied upon (J&J, McDonalds, IBM) have outperformed the new kids on the block (Google, Facebook, Amazon). We know this is just a moment in time and over the long run growth will outperform value. It is important to use history as a guidepost from time to time and remember why we maintain a well-diversified portfolio.
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. 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