Prosperity Partners Blog
A Soft Inflation Reading Fuels a Strong Rally
October’s slower-than-expected rise in the Consumer Price Index fueled a 5.53% rise in the S&P 500 Index on Thursday, which was the 15th-best trading day since 1953 when the 5-day trading week began, according to Bespoke.
Quarterly Market Summary and Outlook – October 2022
With another rocky quarter, equities continued their downhill slide with most equity indexes showing double-digit negative returns year-to-date (YTD).
Smaller Hikes but Longer to the Peak
The Fed may dial back the size of its rate increases—75 bp increases began in June—but the peak in the fed funds rate, what analysts are calling the terminal rate, could be higher than previously expected. And the Fed could maintain that level for a while.
Recession Averted
The U.S. Bureau of Economic Analyst reported that Q3 Gross Domestic Product (GDP), which is the largest measure of goods and services, expanded at an annualized pace of 2.6%, erasing the declines from Q1 and Q2—recession averted, for now.
An Arcane Index Flashes a Warning
Every month, the Conference Board releases what’s called the Leading Economic Index, or the LEI. The LEI consists of 10 economic components, whose changes tend to precede what happens in the economy. The LEI has always turned lower before the onset of a recession, and ticks higher near the end of a recession.
Stubbornly High Inflation
The release of the September Consumer Price Index (CPI) offered more sobering news, as inflation continues to run hot. The U.S. Bureau of Labor Statistics (BLS) reported the CPI for September rose 0.4% versus August. The core CPI, which excludes food and energy, rose 0.6%
Cracks Gradually Form in the Job Market
Last week, the U.S. Bureau of Labor Statistics (BLS) reported that job openings fell by 1.1 million in August to 10.1 million, the second steepest decline on record. Yet, openings remain quite elevated, as illustrated in Figure 1. It’s not that all workers have their pick of jobs, but many businesses have struggled to fill open positions. We see it in the never-ending stream of help wanted signs.
The Dollar vs The World
The dollar has soared to its highest level against the euro in 20 years. It has risen to its highest level against the Japanese yen in 30 years and recently hit a record high against the British pound, according to CNBC.
The U.S. Dollar Index is an index (or measure) of the value of the U.S. dollar relative to a basket of foreign currencies. As the graphic illustrates, the index is at a 20-year high.
FDP Special Market Commentary
We’re in a period of high market volatility and you may feel helpless to do anything but watch your hard earned portfolio decrease in value. Although you might feel a high level of fear about entering the market with new funds, if you’re sitting on cash inflation may be working against you.
A Long Plateau
Chatter that the rate of inflation was on a downward path appears to have hit a snag after the August release of the Consumer Price Index (CPI). Core inflation isn’t rising on a monthly basis, but it isn’t slowing either. As the graphic suggests, it’s been a long plateau.
When Good News is Bad News
Stocks performed well against the backdrop of modest economic growth, which fueled corporate profit growth. Low inflation and modest economic growth limited interest rate hikes by the Federal Reserve, further underpinning equities.
How to Best Position Your Company for Sale
Just as you can prepare a home to maximize the sale price, so too there are many ways to improve the valuation of your company. Some changes may only be on paper, others require looking at how you do business.