Mosaic Weekly Update 10.7.2022

What started as a good week and bounce in the markets quickly faded as weaker corporate earnings outlooks coupled with a surprisingly strong job market put the brakes on the positivity. The job market continues to trend positively as payrolls increased 263,000 for September, while the unemployment rate ticked lower to 3.5% from 3.7% the previous month. It is hard to comprehend that LOWER unemployment numbers would drive a decline in the stock markets. The reality of this good number is that the Federal Reserve will most likely continue to increase interest rates when they meet again in early November. We will also begin to see 3^rd quarter corporate earnings releases in the coming weeks as well. I know I have said this before, but the next few weeks will again be pivotal in how the rest of the year plays out.

After several weeks of decline, the price of oil edged higher throughout the week as OPEC members agreed to decrease the number of barrels being produced per day by 2 million. While this may not seem like a large number in the overall scheme of things, it raises some eyebrows as the world’s energy supply has already been impacted by the Russian invasion. The geopolitical world continues to keep its place in the headlines and there is no question that the monetary gains of such actions are a strong motivator. In a swift response, President Biden directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month. This only furthers the stance by many pundits that believe we need to continue to reduce our reliance on foreign sources.

With the negativity swirling on many levels, it is normal to feel uneasy right now. The truth is, we are sitting in economic “limbo” at the moment as the Federal Reserve continues to increase interest rates while combatting inflation. It is clear that a robust job environment is fueling the fire and putting more pressure on the Fed to respond. Equities have clearly corrected and are possibly showing some signs of sellers’ fatigue in my opinion given the action earlier this week. A big win in my column would be seeing more stability from day to day with a “sideways” trading pattern for a while. However, given the backdrop of what is next on the horizon, the wild swings in daily volatility are most likely here over the next month. The CPI (inflation) data coming late next week will be very telling and as always, we are watching for any changes in consumer spending habits. As of now, there have been few real visible signs of much slowdown other than the housing market. Hang in there and keep the faith.

Happy Fall Ya’ll!

https://www.cnbc.com/2022/10/05/adp-jobs-report-september-2022.html

https://www.cnbc.com/2022/10/07/jobs-report-september-2022.html

https://www.cnbc.com/2022/10/05/oil-opec-imposes-deep-production-cuts-in-a-bid-to-shore-up-prices.html