Weekly Market Commentary
September 18, 2023
The Markets
Adding new ingredients to the economic blender.
The performance of United States economy in 2023 has been as unexpected as a lentil-avocado-cinnamon smoothie – a tasty surprise. Last week, economic data suggested the Federal Reserve may need to do more to slow the economy. The consumer price index showed inflation edging higher, wholesale inflation was higher than expected (largely due to higher energy prices), and retail sales were healthy.
Stronger-than-expected economic data inspired market optimism that the Federal Reserve will bring inflation down without a recession. However, new ingredients are being added to the economic mix that could prove less palatable. These include:
- A government shutdown. It seems unlikely the House of Representatives will pass the 12 appropriations bills required to fund government operations by the September 30 deadline. It’s possible a temporary spending bill will keep federal agencies operating, but that’s not a certainty. In the past, government shutdowns have been short-lived and had little effect on markets and the economy, reported Matt Phillips of Axios Markets.
- The autoworkers’ strike. Autoworkers went on strike against the Big Three automakers last week. The economic effect is expected to be modest although it affects diverse industries. “The strike will likely cause spillover effects in industries that support domestic vehicle manufacturing, such as petrochemicals, steel and glass, as well as to suppliers that produce component parts, electronics and software,” reported Megan Leonhardt of Barron’s.
- The resumption of student loan payments. “The end of the moratorium on student loans payments is set to take place this fall…monthly payments are expected to resume in October. This will be a major financial shock and additional burden to younger renters or millennials, especially those in the low- and moderate-income group who are rent burdened,” reported Thomas Lasalvia, Nick Villa, Christopher Rosin, Lu Chen, and Mary Le of Moody’s Analytics.
It’s possible these events will result in increased market volatility in coming weeks.
Last week, major U.S. stock indices moved lower, according to Barron’s, and yields on longer maturities of Treasuries.
| Data as of 9/15/23 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.2% | 15.9% | 14.1% | 9.4% | 9.0% | 10.1% |
| Vanguard Total Intl Index (Foreign Stocks) | 1.4 | 8.6 | 14.3 | 4.1 | 3.6 | 4.0 |
| Total Bond Market (U.S. Dollar Bonds) | -0.3 | 0.5 | -0.5 | -4.8 | 0.4 | 1.4 |
| Gold (per ounce) | 0.0 | 6.4 | 14.1 | -0.4 | 9.9 | 3.8 |
| Bloomberg Commodity Index | 1.3 | -4.7 | -8.7 | 14.4 | 5.5 | -1.8 |
S&P 500, Vanguard Total International Stock Index, Vanguard Total Bond Market Index, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized. Sources: Yahoo! Finance; MarketWatch; morningstar.com; djindexes.com; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Medicare Enrollment Reminder
Medicare’s Open Enrollment Period is October 15 – December 7 each year. During this period, you can:
- Change from Original Medicare to a Medicare Advantage Plan.
- Change from a Medicare Advantage Plan back to Original Medicare.
- Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
- Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage.
- Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn’t offer drug coverage.
- Join a Medicare drug plan.
- Switch from one Medicare drug plan to another Medicare drug plan.
- Drop your Medicare drug coverage completely.
The Medicare Advantage Open Enrollment Period is January 1 – March 31 each year.
- If you’re in a Medicare Advantage Plan (with or without drug coverage), you can switch to another Medicare Advantage Plan (with or without drug coverage).
- You can drop your Medicare Advantage Plan and return to Original Medicare. You’ll also be able to join a separate Medicare drug plan.
If you need help navigating your coverage options, please let us know as we have partnered with several local professionals who may be able to assist you in selecting the plan that works best for you and your needs.
Best regards,
Waterford Advisors
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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decisions
Sources:
https://www.bls.gov/news.release/cpi.nr0.htm
https://www.bloomberg.com/opinion/articles/2023-09-15/lehman-brothers-china-and-europe-feel-the-fallout-more-than-us (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-18-23_Bloomberg_Happy%20Lehman%20Day%20to%20All%20Who%20Celebrate_2.pdf)
https://www.axios.com/2023/09/13/government-shutdown-wall-street-congress-spending
https://www.barrons.com/articles/uaw-strike-us-economy-recession-dfbe4e15?mod=hp_LEAD_1_B_2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-18-23_Barrons_Actors%2c%20UPS%20and%20Now%20the%20UAW_5.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/09-18-23_Barrons_Data_7.pdf)
https://improbable.com/ig/about-the-ig-nobel-prizes/
https://improbable.com/ig/winners/#ig2023
https://dl.acm.org/doi/10.1145/1959826.1959860
https://www.tandfonline.com/doi/full/10.1080/09658211.2020.1727519#Funding
https://www.palass.org/publications/newsletter/eating-fossils
https://improbable.com/2022/02/11/the-relative-value-of-big-science-prizes/