Prosperity Partners Blog
Red-Hot Inflation Cools
Inflation has bedeviled consumers and investors for over a year. The Federal Reserve waited far too long in responding to high prices, and its abrupt reversal in 2022 pushed equities into a bear market. But the Fed’s kinder, gentler approach this year and a resilient economy have helped shares rally off last year’s low.
Cracks Appear in the Labor Market
It has been a surprising year for the labor market, as job growth has been much more resilient than anticipated. According to CNBC, the U.S. Bureau of Labor Statistics’ monthly nonfarm payrolls report has surpassed analyst expectations for 14-straight months, that is, until June’s report came up short.
9 Fun Facts About the Declaration of Independence
As we commemorate the 247th anniversary of the signing of the Declaration of Independence, let’s take a moment to appreciate some interesting facts about this treasured document. Here are nine fun facts to enjoy!
Report of Housing’s Demise are Greatly Exaggerated
High home prices and the jump in rates have locked some prospective buyers out of the market. Last week, the National Association of Realtors (NAR) reported that existing home sales (this excludes newly built homes), which account for almost 90% of all housing sales, were down 20% versus one year ago (through May).
The Fed Presses the Pause Button
The Federal Reserve held the fed funds rate at 5.00–5.25% following ten consecutive rate increases that began in March 2022. The move was anticipated as policymakers had previously expressed their intention, allowing them time to assess the impact of previous rate hikes.
A New Bull Market
The S&P 500 Index, which tracks 500 large publicly traded companies, entered a new bull market last Thursday, according to the general definition of a 20% rise from the most recent low. The index hit an all-time high of 4,797 on January 3, 2022. It proceeded to decline 25.4% to the most recent low of 3,577 on October 12th. A bear market is typically defined as a 20% or greater drop from the closing peak to the closing trough.
Defying Expectations
May nonfarm payrolls surged past economists’ projections of 190,000 per DJ Newswires, soaring by 339,000 (see Figure 1) as reported by the U.S. Bureau of Labor Statistics (BLS). Surprised? Despite its strength, payrolls have mostly exceeded expectations in the past year. This serves as another reminder of the challenges of economic forecasting.
Fill ‘er Up
The days of pulling up to a gas station, rolling down the window, and asking the attendant to fill ‘er up are long gone. Nowadays, the responsibility falls on someone in the car to pump the gas. As we head into the summer season, it’s no coincidence that the price of gasoline tends to increase, especially as we approach Memorial Day weekend.
About That Earnings Apocalypse
Some investors were bracing for an earnings apocalypse. Once again, fears were exaggerated. It’s not the first time some have been expecting dire results. A CNBC story six months ago previewing Q3 profits suggested earnings could disappoint in a big way. They didn’t.
Easing Inflation, Stubborn Inflation
In the past, investors paid close attention to the monthly employment report. Today the focus has shifted to the CPI. Blame high inflation for the jump in interest rates, which has pressured the major stock market averages. The U.S. Bureau of Labor Statistics reported that while inflation eased in April, it remains high.
Crosscurrents
Here’s a paradox. What happens when an immovable object runs into an irresistible force? In today’s investing world, the Federal Reserve has been that immovable object, jacking up interest rates in order to quell inflation.
Making Heads or Tails Out of the Latest GDP Report
Gross Domestic Product (GDP) is the economy’s largest measure of goods and services. Preliminary data from the U.S. Bureau of Economic Analysis showed that GDP slowed from an annual pace of 2.6% in Q4 2022 to 1.1% in the first quarter of 2023.