wealth-management

S&P Reaches New High

Mon, 19 Jan 2026 16:36:42 GMT

S&P Reaches New High

Federal Reserve Bank of Philadelphia President Anna Paulson said she anticipates that inflation will moderate, the labor market will stabilize, and the U.S. economy will grow by about two percent this year. She added that, “if all of that happens,” then interest rate cuts could be possible later in 2026.

Source: “The Madison Weekly Market Wrap”, January 11, 2026

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Securities and advisory services offered through Madison Avenue Securities, LLC, a Registered Investment Advisor, member FINRA and SIPC. Advisory services also offered through Wealth Management Institute, Inc., a Registered Investment Advisor. Wealth Management Institute and Madison Avenue Securities, LLC are not affiliated entities. Frank Cherniawski is securities registered in: AZ, CA, CT, FL, GA, IN, MI, MO, NC, OH, WA and Advisory Licensed in CA and MI with Madison Avenue Securities, LLC. Please inquire with the advisor about your state prior to further discussion or any decisions.

Compounding Interest: Who Will Earn More

Mon, 24 Nov 2025 19:49:22 GMT

Starting early matters because compounding interest rewards time more than anything else.

This example shows how the earlier a person takes advantage of compounding interest, the more time that money has to grow.

Even small contributions made early can grow larger than big contributions made later, simply because they’ve had more time to compound. In short: time can be a big multiplier of wealth , and starting early gives compounding the longest runway to work in your favor.

Source: “The Madison Weekly Market Wrap”, November 6, 2025.

Government Shutdown

Mon, 06 Oct 2025 19:23:39 GMT

The Federal Government Shutdown, begun Thursday 10/2, continues with no obvious end in sight.

Policymakers and markets have entered uncharted territory without employment data that the government withheld because of its shutdown.

In the past, when the market was overvalued as it is now, a 60/40 portfolio almost always beat the S&P 500 over the subsequent decade.

The S&P 500 bottomed in March 2009 after the Global Financial Crisis at the scary number of 666; it has now topped 6,666. Meanwhile, CAPE suggests that stocks are at their most expensive since the dot-com bubble.

Source: “The Madison Weekly Market Wrap”, October 6, 2025.

New Tariffs Take Effect

Wed, 20 Aug 2025 15:20:56 GMT

President Trump’s new tariffs on more than 90 countries went into effect raising the average U.S. tariff rate to the highest levels in a century.

“BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” he declared on Truth Social. The new rates start at 10 percent but some – for countries such as Brazil and India – soar as high as 50 percent.

Further trade negotiations among several countries are expected to continue. Tariffs have settled right at the top of the range that seemed possible six months ago. Americans will now pay an average effective tariff of 19 percent on their imports. Few major trading partners have been spared the import taxes, which have already disrupted supply chains and are expected to drive up prices for Americans.

Source: “The Madison Weekly Market Wrap”, August 10, 2025.

Gen Z is contributing to their 401(k)s much earlier than millennials did, reports show, and young women are being particularly aggressive about saving.

ldocken@s4connectteam.com (Lance Docken) — Thu, 10 Jul 2025 16:42:21 GMT

Gen Z is contributing to their 401(k)s much earlier than millennials did, reports show, and young women are being particularly aggressive about saving.

Thanks to auto-enrollment, default escalation, and simplified plan designs, American workers are saving more than ever. According to Vanguard’s latest report , the average total savings rate in employer retirement plans has hit an all-time high of 11.7 percent, proving that smart plan design does, in fact, drive better long-term outcomes for retirement readiness.

The personal savings rate in the U.S. averaged 4.7 percent in 2024. This is compared to the average (since 1959) of 8.4 percent. Making matters even more troubling, Americans seem to be getting worse, not better , at saving for their future.

Source: “The Madison Weekly Market Wrap”, July 6, 2025.

U.S. Reaching Trade Deal With China

Wed, 18 Jun 2025 19:28:34 GMT

U.S. Reaching Trade Deal With China

President Trump announced on Wednesday that the U.S. had reached a “deal” with China after two days of trade negotiations in London. In a post on Truth Social , Mr. Trump said that China would relax its export restrictions on rare earth minerals and magnets, but The Wall Street Journal reported that Beijing would place a six-month limit on rare earth licenses to U.S. companies.

The U.S., in exchange, plans to drop its plans to cancel Chinese student visas along with restrictions on certain key exports. Tariffs would stay the same, sitting at 55 percent levies on Chinese goods and 10 percent on American products. It remains unclear whether the agreement will be finalized.

Source: “The Madison Weekly Market Wrap”, June 8, 2025.

Tariffs - Will They Affect Inflation?

Thu, 15 May 2025 18:04:49 GMT

Interest Rates Held Steady But Could They Generate a Rise in Inflation?

The Federal Reserve held interest rates steady amid concerns over the economic impact of the Trump administration’s tariffs.

“If the large increases in tariffs that have been announced are sustained,” Fed Chairman Jerome Powell said, “they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.”

Source: “The Madison Weekly Market Wrap”, May 11, 2025.

Egg Prices Rise and Paper Straws are Out.

Thu, 20 Mar 2025 18:55:21 GMT

The wholesale price of eggs is on the rise, and so is the cost of restaurant breakfast specials.

Our long national paper straw nightmare is over. President Trump signed an executive order switching the federal government back to plastic straws, with the hope that states and cities will follow suit. It is also proof that bipartisanship is not entirely dead. Jon Stewart and Jimmy Kimmel agreed that paper straws are “terrible.”

Data Dump: Industrial Production and Capacity Utilization ; Retail Sales ; Jobless Claims ; PPI ; CPI .

Mr. Powell said the central bank doesn’t need to rush to adjust interest rates, again signaling that officials will be patient before lowering borrowing costs further. “ With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Mr. Powell told the Senate Banking. “We know that reducing policy restraint too fast or too much could hinder progress on inflation,” he said. “At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.”

Inflation Stalling, But Not Rising

Thu, 23 Jan 2025 15:23:44 GMT

Inflation Stalling, But Not Rising

Statistical measures of core inflation show no increase . The Consumer Price Index rose 0.4% month-over-month and 2.9% annually in December. While the leading numbers did indeed show inflation coming under control a slightly greater deal than had been expected, they left no clarity about the way ahead.

Writing for Works in Progress, economics professor Carola Conces Binder unpacked the history of the tool we use to measure inflation, the consumer price index. “The CPI and related measures affect monetary and fiscal policymaking and are often used to adjust Social Security payments, income tax brackets, and wages for millions of workers,” she wrote. “Because of these far-reaching impacts, even relatively small changes in the measurement of the CPI can have major implications for households, firms, and the government’s budget. Thus, the technocratic task of measuring the price level is often at the center of political controversies. The evolution of inflation measurement in the United States has reflected both technical progress and these political forces.”

Social Security Waiting is Big

Fri, 06 Dec 2024 15:28:55 GMT

Social Security Waiting is Big

People get just 70% of their full Social Security benefits if they claim at 62, the full benefit at 67 and 124% of the benefit if they claim at 70. The gain from waiting is so big that it pays for most people to keep working, or even to dip deep into their retirement savings early to cover their expenses so they can delay claiming. A 2022 study found that “virtually all” American workers then in the 45-to-62-year-old age group should wait beyond age 65 to start collecting Social Security checks and that more than 90% should wait till age 70, yet only 10% do so. Many started collecting checks on the first date they were eligible once they turned 62. Why?

Global fund managers think Trump 2.0 means, “Buy America,” but they also think he increases the risks of inflation. The election happened and, overnight, Republican and Democratic consumer sentiment shifted. Inflation has cooled, but Americans are still seething over prices. And bond traders are loading up on bets for further price declines (higher yields) in anticipation that Donald Trump’s pledged policies will fan price increases and keep interest rates high. The Trump Administration will, almost surely, kill ESG. But it was already dying.

Inflation in the U.S. has stopped going down. The Bureau of Labor Statistics reported that the consumer price index, a key measure of inflation, increased in October by 2.6% year over year

The Economy Is Humming & Inflation Has Cooled Off, But...

Wed, 30 Oct 2024 17:57:52 GMT

The Economy Is Humming & Inflation Has Cooled Off, But...

The economy is humming. Inflation has cooled off. Americans are well-employed, getting raises and spending freely. But, with an election in less than two weeks, people still haven’t gotten over how much higher prices are today than in 2020.

The U.S. is increasingly pulling ahead of the world’s advanced economies, with a surge of investment paying off in higher productivity and wages.

Sentiment among U.S. consumers increased in October to a six-month high as households grew more upbeat about buying conditions, partly because of cheaper financing costs.

Sales of existing homes in the U.S. are on track for the worst year since 1995, for the second year in a row. Persistently high home prices and elevated mortgage rates are keeping potential home buyers on the sidelines.

Investors love a simple narrative, and economists are delighted to oblige. There’s just one slight problem: The obvious stories about the U.S. economy have been repeatedly wrong since the Covid pandemic. Three basic assumptions underpin the simple narratives: Government spending matters, monetary policy matters and there is a natural link between growth, unemployment, and inflation. None of the three proved reliable in the past four years, yet each seems self-evidently true, baked into the very structure of the economy. It is, in a word, confusing.

Household Incomes Rose Last Year for the First Time Since the Covid-19 Pandemic

Wed, 25 Sep 2024 15:39:28 GMT

Household Incomes Rose Last Year for the First Time Since the Covid-19 Pandemic

Household incomes rose last year for the first time since the Covid-19 pandemic began, reflecting the effects of easing inflation and a strong job market. The new data from the U.S. Census Bureau on Tuesday signaled an

improvement in 2023 after inflation that spiked to a 40-year-high the prior year swallowed up household income gains.

Federal Reserve Chair Jerome Powell faces a difficult decision as the central bank prepares to cut interest rates next week: Start small or begin big?

The Consumer Price Index (CPI), a measure of inflation, rose 0.2% month-over-month and 2.5% annually in August, the Bureau of Labor Statistics reported on Wednesday, marking the lowest point of annual inflation since February 2021. The figures likely cemented Federal Reserve officials’ decision to cut interest rates by a quarter of a percentage point next week.

Producer inflation was relatively tame in August, keeping alive expectations that the Federal Reserve will cut interest rates very soon. Wholesale prices have been more volatile than consumer prices in 2024 but remain on track for the Fed’s goals.

Tech and Energy Stocks Remain Top Performers for 2024 YTD

Tue, 23 Jul 2024 17:14:35 GMT

Tech and Energy Stocks Remain Top Performers for 2024 YTD

The major domestic equity indexes ended mixed as a rotation in market leadership to small-cap and value shares continued and market breadth improved. The narrowly focused Dow Jones Industrial Average outperformed, and value stocks outpaced growth stocks by 477 basis points (4.77 percentage points), as measured by Russell indexes – the largest divergence since March 2023. Also notable this month was a widespread global disruption to computer systems due to an error in CrowdStrike’s security update to some users of the Microsoft operating system.

A major factor in the underperformance of growth stocks was a sharp decline in chip following news that the Biden administration had told allies it was considering severe export curbs if companies such as Tokyo Electron and the Netherlands’ ASML Holding continued providing China with access to advanced semiconductor technology.

Polls showing an increasing likelihood of a Republican sweep in the November elections also appeared to favor value stocks. The prospect of lighter banking regulation seemed to provide a boost to the value-oriented financials sector, for example, while the prospect of higher tariffs under a Trump administration may have favored industrials and business services shares.

High Mortgage Rates and Near-Record Home Prices Continue to Stall the Market

Mon, 10 Jun 2024 15:14:54 GMT

High Mortgage Rates and Near-Record Home Prices Continue to Stall the Market

Home sales fell in April for the second straight month, as high mortgage rates and near-record home prices continue to stall the market during the prime selling season. Sales of previously owned homes decreased 1.9% from the prior month to a seasonally adjusted annual rate of 4.14 million, the National Association of Realtors announced Wednesday.

Inflation rose about as expected in April, with markets on edge over when interest rates might start coming down, according to a measure released Friday that is followed closely by the Federal Reserve.

Real gross domestic product increased at an annual rate of 1.3% in the first quarter of 2024, according to the “second” estimate released by the Bureau of Economic Analysis.

Supermarket Goods Increased in Price by 36.5% Over the Past 4 Years

Tue, 16 Apr 2024 15:01:12 GMT

Supermarket Goods Increased in Price by 36.5% Over the Past 4 Years

An analysis by The Wall Street Journal found that a commonly purchased basket of supermarket goods has increased in price by 36.5% over the past 4 years (+8.1% per year). This is much higher than the U.S. Government CPI figures, which show food price inflation of 25.2% over the last 4 years (+5.8% per year).

A key U.S. inflation gauge increased last month at its fastest pace since April 2023 , showing that underlying price pressures remain persistent. The Producer Price Index, a closely watched measure of inflation at the wholesale level, rose 2.1% for the 12 months ended in March, up from a 1.6% gain in February, according to Bureau of Labor Statistics.

Traders are now pricing in fewer than two rate cuts for 2024 — down from more than six at the start of the year — perhaps starting in July. But even that’s looking tenuous due to headline CPI hitting 3.5% in March. The growing view on Wall Street is that inflation will need to get closer to the Fed’s 2% target before the central bank makes a move. It’s now if, not when.

Alongside its $1.50 hot dog and soda combo, gallon tubs of mayonnaise, and value packs of socks , Costco, the warehouse retailer, has been selling gold bars since October. Now Costco is selling up to $200 million worth of gold and silver each month.

Inflation Climbing Through February

Tue, 02 Apr 2024 19:20:35 GMT

Inflation Climbing Through February

Inflation climbed 3.2% in the year through February, faster than expected, and a sign that inflation will likely prove difficult fully to eliminate. The fresh data underscore that returning inflation back to a consistently lower level is likely to be a bumpy process – and back up the Federal Reserve’s decision to proceed carefully as officials consider when and how much to lower interest rates.

The Bureau of Labor Statistics reported that the producer price index – a measure of what suppliers and wholesalers are charging customers – rose 0.6% month-over-month in February, double what economists expected.

U.S. consumers are proving a little less optimistic about the country’s economic outlook, despite a backdrop of easing inflation, energetic growth, and impending cuts to interest rates. The University of Michigan’s consumer-confidence survey slipped backward slightly to 76.5 in mid-March from 76.9 last month.

The Commerce Department reported that retail sales – spending on goods including food and fuel – increased by 0.6% month-over-month in February, slightly below expectations.

In the week ending March 9, the advance figure for seasonally adjusted initial jobless claims was 209,000 , a decrease of 1,000 from the previous week’s revised level.

Last week, the S&P 500 notched its longest stretch since 2018 without a drop of at least 2%.

Inflation has taken a toll on consumers, who continue to experience sticker shock when buying daily essentials. For example, deodorant that costs twice as much as just a few years ago. Elsewhere, discount retailer Dollar Tree said it plans to close about 1,000 locations.

The Great Retirement Boom Surges Again

Fri, 16 Feb 2024 18:53:52 GMT

The Great Retirement Boom Surges Again

Economists long expected the share of retirees in the population to soar as baby boomers aged. Covid-19 then caused the number to spike well beyond expectations, a surge dubbed the “Great Retirement Boom.” But just as they seemed to be coming back down, the numbers surged again in recent months, reaching a post-pandemic record in December. The U.S. now has around 2.7 million more retirees than expected.

There’s a striking disconnect between the widely shared pessimism among Americans and measures that show the economy is robust. Consumers are spending briskly – behavior that suggests optimism, not retrenchment. Inflation has tempered. Unemployment has been below 4 percent for 24 straight months, the longest such stretch since the 1960s. The disconnect has puzzled economists, investors, and business owners. But press Americans harder, and the immediate economy emerges as only one factor in the gloomy outlook. Americans feel sour about the economy, many say, because their long-term financial security feels fragile and vulnerable to wide-ranging social and political threats.

The latest report on U.S. jobs showed a huge month for the economy, with the U.S. adding 353,000 jobs to start 2024. But there are some worrisome details.

Amid a confusion of artificial-intelligence narratives, “quant” analyses, and sustainable funds, the oldest and simplest stock-picking strategy – dividend investing – lies almost forgotten. There might be ways to dust it off.

Understanding Bond Basics

Tue, 16 Jan 2024 17:30:04 GMT

Understanding Bond Basics

Bonds can help you add diversification and stability to your overall retirement strategy and are commonly considered less volatile than stocks. In fact, as interest rates have generally declined since the early 1980s, many bonds have provided solid long-term returns.

However, while bonds can be an attractive addition to an overall retirement income strategy, they are not without risk. In fact, if you’re counting on bonds to help you save for retirement or to generate retirement income, you could find that their value has decreased when it’s time for you to cash in or reinvest in another bond.

Bonds fluctuate in value in inverse correlation to changes in interest rates. When interest rates go up, a bond’s value goes down, and vice versa. Contact Wealth Management Institute so we can help you plan your financial future!

Wondering How to Create Income in Retirement?

Mon, 06 Nov 2023 18:19:55 GMT

Wondering How to Create Income in Retirement?

Planning for retirement requires taking a realistic look at future sources of income. For example, how much Social Security will you receive each month in retirement? Do you have a pension? What about a 401(k) or IRA?

One often-overlooked way to create guaranteed income in retirement is with an annuity. We can help you with common concerns about annuities like:

“Annuities are too complicated to understand.”

“I’m already saving for retirement. I don’t need an annuity.”

“An annuity will lock up my money so I can’t access it.”

“Annuities are expensive. Where does my money go?”

“I might die before my contract is up.”

For answers to common annuity questions like these, contact our office and we can help guide you in making great decisions as you plan for retirement.

Annuity guarantees rely on financial strength and claims-paying ability of issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by carrier. Annuities are not FDIC insured.

American's Finances Take a Hit as 60% Are Living Paycheck to Paycheck

Tue, 17 Oct 2023 18:00:11 GMT

American's Finances Take a Hit as 60% Are Living Paycheck to Paycheck

Rising interest rates are hitting Americans’ finances. Indeed, 60% of Americans live paycheck-to-paycheck.

The Fed’s preferred inflation gauge, the personal-consumption expenditures price index, rose a seasonally adjusted 0.4% last month, largely reflecting energy costs.

Personal consumption, the main driver of the U.S. economy, rose an annualized 0.8% in the April-to-June period, according to the third estimate of gross domestic product from the U.S. Bureau of Economic Analysis. That compared with 1.7% in the previous estimate and marked the weakest advance in over a year.

The average rate on the standard 30-year fixed mortgage jumped to 7.31% , mortgage-finance giant Freddie Mac announced, the highest level since December 2000. Mortgage rates have roughly doubled since early last year.

Sentiment among U.S. consumers weakened slightly in September, amid greater uncertainty about the direction of the economy.

Despite 22-Year High Interest Rate, the Economy Remains Resilient

Mon, 11 Sep 2023 18:43:18 GMT

Despite 22-Year High Interest Rate, the Economy Remains Resilient

Despite the Federal Reserve raising interest rates to a 22-year high, the economy remains surprisingly resilient, with estimates putting third-quarter growth on pace to easily exceed its 2 % trend. It is one of the factors leading some economists to question whether rates will ever return to the lower levels that prevailed before 2020 even if inflation returns to the Fed’s 2% target. The neutral rate of interest — the rate that promotes stable economic growth and inflation — may have been pushed permanently higher due to swelling government deficits and rising productivity.

Federal Reserve Chair Jerome Powell cautioned that past interest-rate increases had yet to slow the economy fully, an argument for holding rates steady for now, even though stronger and sustained growth could require higher rates to keep inflation declining. “Given how far we have come, at coming meetings we are in a position to proceed carefully,” Powell said in a heavily anticipated address at the Kansas City Fed’s annual symposium in Wyoming’s Grand Teton National Park. “We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”

Existing home sales fell in July for the fourth time in five months, slipping by 2.2% month-over-month and 16.6% yearly, the National Association of Realtors announced. The slump comes amid rising mortgage rates, limited supply, and spiking home prices — the national median existing-home price rose 1.9% in July from the previous year.

Mortgage rates pushed to a fresh two-decade high this week, making it tougher for the housing market to emerge from its stark slowdown.

The BRICS group, which includes Brazil, Russia, India, China, and South Africa, agreed to bring in six new members. Iran and Saudi Arabia – sworn enemies, until recently – plus the United Arab Emirates, Egypt, Ethiopia, and Argentina were invited to join the grouping, which seeks to reshuffle the world order in favor of developing countries (and away from the United States).

U.S. Economic Growth Slows

Tue, 08 Aug 2023 16:17:15 GMT

U.S Economic Growth Slows

U.S. economic growth slows , suggesting a darkening outlook for the global economy.

Members of the Federal Reserve’s Open Market Committee approved another 25-basis point interest rate increase this week, after previously pausing the hiking campaign at the committee’s July meeting. The central bank’s target federal funds rate range is now between 5.25- 5.5%—the highest level since 2001. Fed Chair Jerome Powell noted that the Fed’s staff are no longer forecasting a recession.

Gross domestic product grew at a seasonally- and inflation-adjusted 2.4% annual rate in the second quarter, the Commerce Department announced. That was faster than economists expected and above the 2% growth in the first three months of the year.

Wall Street has dialed back its recession forecasts.

U.S. home-builders broke ground on more new projects in May , as strong demand from buyers and a limited supply of homes for sale outweighed higher costs brought on by rising interest rates. Housing starts jumped to an annual rate of 1.6 million last month, the Commerce Department announced, the fastest pace in more than a year.

The employment-cost index, a measure of compensation growth closely watched by Fed officials, rose 4.5% last quarter from a year earlier, slowing from a 4.8% increase between January and March. The personal-consumption expenditures price index, the Fed’s preferred inflation measure, rose 3% in June from a year earlier, the Commerce Department announced in a separate report. That was down from a 3.8% rise the prior month.

Worker filings for unemployment benefits, a proxy for layoffs, declined by 7,000 last week to a seasonally adjusted 221,000, the Labor Department announced. That was the lowest level since February and close to 2019’s average of about 220,000.

Home Prices Continue to Fall

Tue, 06 Jun 2023 14:40:12 GMT

Home Prices Continue to Fall

The national median existing-home price fell 1.7% in April from a year earlier to $388,800, the biggest year-over-year price decline since January 2012 , the National Association of Realtors announce. Median prices were down 6% from a record $413,800 in June. A steep rise in mortgage rates since the start of 2022 has made home purchasing far less affordable to most buyers, weighing on demand. Existing- home sales have declined for 14 out of the past 15 months and are down roughly one-third since the start of 2022.

The Labor Department announced on 5/18/23 that the number of workers applying for first-time unemployment benefits fell after hitting the highest level in a year and a half.

Yields on U.S. Treasury securities have climbed to their highest levels since the week that Silicon Valley

Bank collapsed, highlighting a rebound in investors’ expectations for economic growth and inflation.

The portion of small-business owners who expect to expand their workforce over the next year was below 50% for the second month in a row in May, hitting the lowest level since June 2020. Consumers spent more on autos and dining out last month, while also boosting online purchases. They cut spending on gasoline and on big-ticket purchases such as appliances and furniture.

The share of auto and credit-card loans that became at least 90 days delinquent approached pre-pandemic levels in the opening months of 2023, the Federal Reserve Bank of New York announced, a sign more Americans are struggling to pay their bills. The age group with the highest delinquency rate across all categories of debt was 18 to 29-year-olds.

Interest Rates High for Longer

Tue, 02 May 2023 14:01:31 GMT

Interest Rates High for Longer

The economy is proving more resilient and inflation more stubborn than economists expected a few months ago, and as a result the Federal Reserve will keep interest rates high for longer, according to The Wall Street Journal’s latest survey of economists.

Small and midsize U.S. banks lost hundreds of billions of dollars in recent weeks to their bigger peers and to money-market funds offering higher yields. That is likely to force many of them to increase the interest rates they are paying to avoid losing more customers.

The Commerce Department reported that U.S. retail sales fell 1% month-over-month in March, the second straight month of decline. The data suggests higher interest rates are starting to affect consumers, who spent less on goods like cars, furniture, and appliances.

Goldman Sachs economists now estimate, based on tax receipts, that the U.S. will hit the debt ceiling by early June, rather than August as previously projected.

The National Association of Realtors reported the median existing-home sales price in the U.S. was $375,700 in March – down 0.9% year-over-year, the largest annual price drop since January 2012. Sales of previously owned homes decreased 2.4% from February and were down 22% year-over-year.

The Department of Labor reported that initial jobless claims – a proxy for layoffs – rose by 5,000 week-over-week to a seasonally-adjusted 245,000 claims the prior week, potentially a sign the economy is starting to cool as the Federal Reserve raises interest rates to tamp down demand and reduce inflation.

For many people, the idea of stopping work is a nonstarter – an inevitable path to boredom, ill health, and a life devoid of meaning. The Wall Street Journal talked with some of them and shared what they had to say.

Worries of Bank Failures

Mon, 10 Apr 2023 19:13:25 GMT

Worries of Bank Failures

Worries Silicon Valley Bank failure would set off a wave of new collapse have eased, despite the recent closure of another large regional, New York’s Signature Bank, which had heavy exposure to cryptocurrency markets. The Fed, the Federal Deposit Insurance Corporation, and the Treasury Department announced that all SVB depositors would have full access to funds the following morning, while the Fed made additional funding available to banks to safeguard deposits and prepared to address any potential liquidity pressures.

Eleven of the largest U.S. banks – Including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo – announced they were depositing a combined $30 billion in the San Francisco-based First Republic Bank in an effort to instill confidence in the nation’s mid-sized banks and assuage fears of a bank run like the one that caused Silicon Valley Bank.

Hopes that the Fed might adjust its monetary policy in response to events seemed to drive a rally. Concerns that policy makers would reaccelerate the pace of rate hikes from 25 basis points to 50 basis points suddenly seemed off the table.

Recent news that European banking giant Credit Suisse was also experiencing problems sent markets sharply lower again, even though the Swiss bank’s problems were different in nature. Reports that the Swiss National Bank was planning to stabilize CS fostered a rally the following day.

Domestically, the struggles of California-based First Republic Bank, which had a focus on the tech sector like SVB’s – if not as extreme – also weighed on sentiment. After some initial uncertainty, traders appeared relieved by news that major banks had deposited $30 billion with First Republic to calm fears about its balance sheet.

Company Profits Are Getting Squeezed

Fri, 03 Mar 2023 16:06:46 GMT

Company Profits Are Getting Squeezed

Company profits are getting squeezed. With fourth-quarter earnings season nearly complete, the net profit margin of companies in the S&P 500 has fallen to 11.3%, based on actual results and analyst estimates for companies that have yet to report. That would mark the sixth consecutive quarterly decline amid rising costs for key inputs such as labor, materials, and energy.

The personal consumption expenditures price index excluding food and energy increased 0.6% for the month of January , and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%. The core PCE gains were 0.4% and 4.6% in December.

Natural-gas prices have dropped more than 65% since mid-December and this week hit their lowest level since 2020’s pandemic lockdown, leading producers to throttle back drilling in a dramatic turn in the market for the heating and power-generation fuel.

Federal Reserve officials are signaling that a resilient U.S. economy could lead them to raise interest rates somewhat higher than they had anticipated to conquer high inflation.

U.S. existing-home sales fell for the 12th straight month in January –and the outlook isn’t much better for February. The Mortgage Bankers Association’s weekly purchase index, a measure of applications for mortgages, dropped to its lowest level since 1995 last week. That is the latest sign that high interest rates are keeping potential buyers on the market's sidelines.

The U.S. housing market weakened in January for the 12th straight month as continued high mortgage rates kept buyers on the sidelines. Sales of previously owned homes, which make up most of the housing market, fell 0.7% in January from the prior month to a seasonally adjusted annual rate of 4 million, the slowest since October 2010, the National Association of Realtors announced Tuesday. January sales fell 36.9% from a year earlier.

Consumers are spending more on food and less on electronics, apparel, and home improvements as inflation and changing habits zap demand for many goods, two of the country’s largest retailers reported Tuesday.

Supply-chain snarls are fading from among the top challenges facing some U.S. companies as freight congestion eases, shipping costs fall and factories in Asia are freed from Covid-19 lockdowns.

Layoffs at White-Collar Companies Are Rising

Fri, 20 Jan 2023 14:51:22 GMT

Layoffs at White-Collar Companies Are Starting to Rise

Layoffs at white-collar companies are starting to rise. Now the question hanging over the economy in 2023 is whether that trend spreads to blue-collar industries as interest rates bite. A new wave of tech layoffs signals how executives are pivoting from a growth-above-all mindset to protecting their bottom line.

U.S. inflation eased to 6.5 percent in December compared with a year earlier, marking the sixth straight monthly deceleration since a mid-2022 peak. The consumer-price index, a measurement of what consumers pay for goods and services, rose at its slowest pace since October 2021, the Labor Department announced Thursday.

Prices were lower last month for dozens of products including airline tickets, chicken, and shoes, providing some modest relief to Americans who faced historically high inflation in 2022.

The Treasury Department reported this week that the federal government ran a budget deficit of $85 billion in December 2022, a significant increase from the $21 billion deficit it ran in December 2021.

An annual survey carried out by the World Economic Forum shows policy makers, industry leaders and experts on risk expect high inflation and pressure on energy and food prices to persist and pose the most serious of a growing list of risks to global stability in 2025.

There are four big risks when it comes to bringing down inflation: geopolitics, domestic politics, demographics, and the Fed.

The World Bank sharply lowered its growth forecast for the global economy this year as persistently high inflation has elevated the risk for a worldwide recession.

Federal Reserve Chair Jerome Powell said the central bank must avoid straying into political issues (like climate) that aren’t directly related to its economic-management objectives to protect its ability to bring down inflation without interference from elected officials.

Securities and a dvisory services offered through Madison Avenue Securities, LLC, a Registered Investment Advisor, member FINRA and SIPC. Advisory services also offered through Wealth Management Institute, Inc., a Registered Investment Advisor. Wealth Management Institute and Madison Avenue Securities, LLC are not affiliated entities. Frank Cherniawski is securities registered in: AZ, CA, CT, FL, GA, IN, MI, MO, NC, OH, WA and Advisory Licensed in CA and MI with Madison Avenue Securities, LLC. Please inquire with the advisor about your state prior to further discussion or any decisions.

Life Expectancy is Increasing

Tue, 06 Dec 2022 17:52:53 GMT

Life Expectancy is Increasing. Are You Ready?

Americans are living longer. On average, men who have reached age 65 can expect to live an average of 84 years, while women who have reached age 65 live an average of 86.6 years.

We can thank a variety of factors for our increasing longevity. Advancements in medical technology, knowledge about fitness and nutrition, and access to vaccines and medicines have all played a role in adding years to our lives. Older Americans are also putting more life in those years; many retirees enjoy active lifestyles that may include travel, exercise, gardening and other physical activities among their hobbies.

Longer lives mean a need for income that will cover the additional years. While many retirees have eliminated some of the costs from their working years, living an active lifestyle often creates new expenses to add to the budget.

What next? You’ve done it: You’ve worked hard and saved for your retirement. But now you have questions. How do I make sure the money lasts? How do I cover all my expenses? Will my taxes increase? Will I have anything left to leave to my loved ones?

Today’s retirees are facing unique challenges related to longer lives, increasing health care costs, greater need for long-term care and growing demand to care for loved ones. Understanding the options and navigating the obstacles resulting from these challenges can be overwhelming for many individuals.

We can help devise a plan that addresses your questions and “what-ifs” about retirement. We will work with you to find solutions that fit your unique circumstances, moving you along the path to the retirement you envisioned.

The journey to retirement is a long one. You should start today to help ensure you’ll have enough income tomorrow. Call now to schedule your personalized retirement income analysis and get answers for questions about your retirement. It’s your retirement — make it a great one!

Social Security Rising 8.7%

Fri, 28 Oct 2022 13:31:42 GMT

Social Security Rising 8.7%

Based on the new data through September, the Social Security Administration’s final cost-of-living adjustment for Social Security beneficiaries will be 8.7%. That’s great news, but there may be tax consequences.

U.S. consumer inflation excluding energy and food accelerated to a new four-decade high in September, a sign that strong and broad price pressures are persisting. The Labor Department on Thursday said that its so-called core consumer-price index — which excludes volatile energy and food prices — rose 6.6% in September from a year earlier, the biggest increase since August 1982.

U.S. mortgage rates jumped to their highest level in more than two decades. The average 30-year fixed mortgage rate hit 6.92% last week, according to a survey of lenders released Thursday by mortgage giant Freddie Mac.

Global economic growth is likely to slow next year more than previously expected , the International Monetary Fund said, warning living conditions will worsen as soaring inflation harms people’s lives around the world. The IMF attributed the weaker outlook primarily to the effects of inflation, Russia’s invasion of Ukraine and the slowdown in China brought on by frequent Covid-19 lockdowns and problems in its property sector.

The Organization of the Petroleum Exporting Countries slashed its forecasts for global economic growth and crude-oil demand , offering a justification for the cartel’s recent 2 million barrel-a-day supply cut that it said was part of ongoing efforts to balance oil markets.

The Biden administration is proposing a new rule that could put more gig workers on company payrolls, scrapping a Trump administration rule from 2021 that made it easier for firms to classify workers as independent contractors.

The U.S. dollar’s surging value relative to the euro, the Japanese yen, the British pound and other currencies is making foreign-made goods cheaper to import, while exports of U.S.-made goods grow more expensive for foreign buyers.

For the first time ever, U.S. national debt crossed above $31 trillion this month. The CBO’s preliminary deficit figures for the 2022 fiscal year, which ended September 30, show the federal budget shortfall fell by half. The CBO’s preliminary deficit figures for the 2022 fiscal year, which ended September 30, show the federal budget shortfall fell by half.

Electricity Inflation Nearly Double Core Inflation!

Tue, 27 Sep 2022 13:04:02 GMT

Electricity Inflation Nearly Double Core Inflation!

Electricity costs rose 15.8% in August from a year ago, the biggest jump since 1981, driven by higher prices for natural gas.

The annual rate of inflation decreased in August for a second consecutive month, from 8.5% to 8.3% measured by Consumer Price Index, The Bureau of Labor Statistics reported. That figure was driven largely by falling gas prices, however, which obscured alarming rates of inflation in other areas of the economy, like food, shelter, medical care, furniture, and cars and trucks.

Core inflation (which excludes the 5% drop in energy prices and 0.8% jump in food prices), increased at a 6.8% annual rate in August. The news all but ensured the Federal Reserve will continue aggressively hiking interest rates in the coming months, sending stocks tumbling.

The Dow Jones Industrial Average fell 3.94% in mid-September — the index’s worst day since June 2020.

The number of people filing new claims for unemployment benefits fell for the fifth straight week last week to 213,000 from 218,000 the previous week, an indication that the labor market remains strong even though other parts of the economy are weakening.

Mortgage rates hit 6.02% in mid-September, the highest level since 2008. That’s more than double where they stood a year ago, according to mortgage giant Freddie Mac.

Median household income was essentially unchanged at $70,800 last year after adjusting for inflation, according to the U.S. Census.

The poverty rate in 2021 was 11.6%, also unchanged from 2020. Roughly 37.9 million people lived in poverty last year. The poverty threshold for a four-person household last year was $27,740.

Deposits at U.S. banks fell by a record $370 billion in the second quarter as Federal Reserve rate increases are prompting investors to move money out of banks and into higher-yielding investments.

Can the Feds Tame Inflation?

Tue, 06 Sep 2022 12:53:42 GMT

Can The Feds Tame Inflation?

Domestic stocks moved sharply lower in late August as traders became less optimistic that the Federal Reserve will be able to tame inflation without causing a significant economic slowdown.

The Federal Reserve must continue raising interest rates and hold them at a higher level until it is confident inflation is under control even if unemployment rises, Chairman Jerome Powell said at a central bank retreat.

The second-quarter decline in U.S. economic output was less severe than initially estimated and unemployment claims fell slightly last week, signs of measured slowing in the overall economy in the face of high inflation and easing consumer demand.

Business a ctivity in the U.S., Europe, and Japan fell in August, according to new surveys, pointing to a sharp slowdown in global economic growth as higher prices weaken consumer demand and the war in Ukraine scrambles supply chains.

Mortgage rates jumped to the highest level since June , adding pressure to the fast-cooling housing market. The average rate on a 30-year fixed mortgage climbed to 5.55% in August, according to a Freddie Mac survey of lenders released Thursday.

The surprise in a faltering economy: Laid-off workers are quickly finding jobs.

A surplus of empty office space threatens to hollow out U.S. business districts.

Severe droughts across the Northern Hemisphere — stretching from the farms of California to waterways in Europe and China — are further snarling supply chains and driving up the prices of food and energy, adding pressure to a global trade system already under stress.

President Biden will forgive up to $20,000 in federal student loan debt for tens of millions of Americans, a move that will provide unprecedented relief for borrowers but is certain to draw legal challenges and political pushback.

Home Sales Fall, Interest Rates Up

Fri, 05 Aug 2022 14:29:46 GMT

Home Sales Down, Interests Rates Up

Advertising is typically an early target of corporate budget trimming when signs of slowing demand emerge, and the week’s economic data provided evidence for caution.

Existing-home sales fell for the fifth straight month in June, declining 5.4% from May and 14.2% from a year earlier, the National Association of Realtors reported.

Mortgage applications fell mid June, hitting their lowest point since 2000 , according to Mortgage Bankers Association. The median sales price of existing homes was up 13.4% year over year to $416,000, an all-time high.

Economists increasingly expect the Federal Reserve, in its efforts to push down inflation, to raise rates enough to trigger a recession, with many worrying the central bank will go too far. Economists surveyed by The Wall Street Journal now put the chance of a recession sometime in the next 12 months at 49% in July.

U.S. wages are going up . But those steady gains have been wiped out by high prices.

Traders are in “full capitulation” mode as outlooks for global growth and profits are at all-time lows, according to the BofA's latest fund manager survey. Cash levels are the highest since 9.11.

Oil prices have slipped below the $100 a barrel mark , amid a roughly 20% sell-0ff since early June. Falling prices could disrupt the doom loop of rising inflation, rising interest rates, and rising

expectations of further Fed hikes that have crushed the stock market this year.

The European Central Bank raised interest rates mid-June by half a percentage point — returning the main deposit rate to zero – and announced it plans to buy the debt of weak European economies to protect them from the rate hike and bolster the euro amid high inflation and we akening economic growth.

In a sign the United States’ tight labor market is beginning to slacken , the Labor Department reported mid-June that initial jobless claims increased by 7,000 week-over-week to 251,000, the highest level this year.

Feds Most Aggressive Rate Hike Since 1994

Fri, 15 Jul 2022 13:37:20 GMT

Feds Most Aggressive Rate Hike Since 1994

The Federal Reserve’s most aggressive rate hike since 1994 raised recession fears and sent stocks sharply lower for a second consecutive week. The S&P 500 recorded its worst weekly decline since March 2020 and entered a bear market, ending the mid June nearly 24% below its January peak.

On June 13th, every member of the S&P 500 was in negative territory at one point , something that hasn’t happened since at least 1996.

The Fed’s policy committee announced on June 15th that it was raising the federal funds rate by 75bps to a target range of 1.5% to 1.75% , its highest level since early 2020.

US mortgage rates hit their highest level in more than 13 years , the latest sign of market repercussions from the Fed’s efforts to bring inflation under control through higher borrowing costs.

The mood on Wall Street seemed to sour, perhaps due to worrisome signs that the economy might be more vulnerable to a slowdown than Powell envisioned. Several reports indicated that the housing sector was already feeling the impact of Fed tightening and the surge in mortgage rates:

• Building permits fell 7% in May to their lowest level since last September

• Housing starts sank 14.4%, the biggest drop since the onset of the pandemic.

Weekly jobless claims also came in higher than expected (229,000 versus roughly 210,000).

Retail sales data further stoked recession fears. Overall sales fell 0.3% in May, dragged lower by a sharp decline in auto purchases. The data confirmed consumers were buying less in real terms given the higher year-over-year increase in consumer inflation of 8.6%.

Shares in Europe fell sharply on concerns that economic growth may stall after several central banks announced rate increases. The pan-European STOXX Europe 600 ended 4.6%.

Major country indexes also recorded material declines

• Germany’s DAX dropped 4.62% France’s CAC 40 declined 4.92%, Italy’s FTSE MIB lost 3.36%, and the UK’s FTSE 100 pulled back 4.12%

• In Asia, Japan’s stock markets registered sharp losses for mid June, with the Nikkei 225 down 6.69%

• Alone among the major country indexes, Chinese stock markets advanced as the Shanghai Composite added 1% and the blue-chip CSI rose 1.4%, its highest level in three months.

Americans Stressed About Money

Fri, 03 Jun 2022 14:57:46 GMT

Americans Stressed About Money

Americans are more stressed about money than they’ve ever been , according to the American Psychological Association’s latest Stress In America Survey. “87% of Americans said that inflation and the rising costs of everyday goods is what’s driving their stress,” More than 40% of U.S. adults say money is negatively impacting their mental health, according to Bankrate’s April 2022 Money and Mental Health report.

Wall Street continued its weekly losing streak as fears grew that inflation was causing consumers to pull back on discretionary spending , setting the stage for a coming recession. At its low point in late May, the S&P 500 was down roughly 20.9% from its January intraday high.

Disappointing earnings and revenue results from several of the nation’s major retailers appeared to spill over into negative broader sentiment target fell roughly 25% after earnings fell short of estimates by nearly a third, which the company attributed to a combination of reduced sales of discretionary items, such as televisions, and higher costs. Results from Walmart, Lowe’s, and Home Depot also fell short of expectations, while Costco shares may have tumbled in part on (apparently false) rumors that it was raising the price of its popular food court hot dog.

A gauge of manufacturing activity in the Mid-Atlantic region fell short of expectations by a wide margin and weekly jobless claims rose more than expected . Housing starts and existing home sales also came in lower than expected, reflecting the pressure from higher mortgage rates.

The hard evidence continues to show that the U.S. economy is booming. Retail sales grew 0.9% to a record $677.7 billion in April from March, according to a Census Bureau report released Tuesday. Restaurants and bars, department stores, electronics and appliance stores, and clothing stores led growth.

Consumers continue to be in good shape financially . They’re sitting on more than $2 trillion worth of excess savings, which continues to represent a massive tailwind for the economy. The U.S. labor market has also added a whopping 2.1 million jobs this year.

The number of people receiving unemployment benefits fell in early May to the lowest point in more than 50 years . After leaving the labor force in unusual numbers early in the pandemic.

Allianz Global Investors got hit with a huge ($5.8 billion) penalty for fraud and misrepresentation with respect to one of its institutional funds. Because the fund was shut down (the fraud was horrific), Allianz had to transfer $120 *billion* in AUM to VOYA.

Rising Gas Prices

Wed, 23 Mar 2022 15:42:56 GMT

Rising Gas Prices

The price for U.S. gasoline hit record highs , tracking a surge in global energy markets and showing how the war

in Ukraine is having far-reaching economic consequences.

Russia’s invasion of Ukraine sets the stage for faster-rising consumer prices.

President Biden is caught between conflicting demands that he tame rising consumer prices, while banning Russian oil imports, a sanction that would threaten even more inflation and raise pressure on allies with more dependence on oil imports.

President Biden announced he was banning energy imports from Russia — the price of Brent crude increased 15.9%, and the price of West Texas Intermediate (WTI) crude was up 14.4%.

The war in Ukraine is pushing the Biden administration toward Venezuela, Iran, and Saudi Arabia as it hunts for new oil supplies.

Domestic stocks moved lower last week amidst more heavy volatility provoked by the continued Russian invasion of Ukraine.

·The Nasdaq fell 22% below its recent peak, more than the 20% threshold that typically delineates a bear market.

·At its low point, the S&P 500 was roughly 14% off its high, still in correction territory.

·Consumer staples stocks underperformed as Coca-Cola, PepsiCo , and other food and consumer products makers announced that they were suspending business in Russia.

Soaring commodity prices, sweeping financial sanctions and the potential for a ban on energy imports from Russia after it invaded Ukraine are threatening to hobble a global economy still weakened by the Covid-19 pandemic.

Rising energy, food and services prices pushed already elevated U.S. inflation to a 7.9% annual rate last month — another four-decade high — with oil and commodity market disruptions from the Ukraine crisis expected to add more cost pressures.

The Dow (-2.4%) and S&P 500 (-3%) had their worst days of the year on Monday as investors weighed the economic ramifications of war in Ukraine.

The U.S. labor market remains incredibly tight, as the Bureau of Labor Statistics reported Wednesday 2.8% of workers quit their jobs in January.

Sentiment Worries with Ukraine & Inflation

Thu, 24 Feb 2022 18:37:00 GMT

Sentiment Wanes on Worries of Ukraine & Inflation

The domestic large-cap indexes suffered their second consecutive week of declines as worries over a Russian invasion of Ukraine and high inflation weighed on sentiment .

A steep decline in Meta Platforms (Facebook) hurt the communication services sector .

Conflicting signals on whether Russian troops were preparing to cross the border with Ukraine appeared to whipsaw markets throughout last week. Stocks fell on Monday afternoon following a CNN report that the president of Ukraine, Volodymyr Zelensky, said the government had been informed that the coming Wednesday would “be the day of attack.” The indexes then rallied on Tuesday, after Russian President Vladimir Putin said he hoped for a diplomatic solution to tensions with the U.S. and its allies and announced a partial pullback of troops near the Ukrainian border. Stocks then reversed course and headed lower again on Thursday, after U.S. officials stated that there was no evidence of a pullback and that an invasion was “imminent.”

Contradictory signs from the Federal Reserve fostered volatility. St. Louis Fed President James Bullard told a CNBC interviewer that policymakers “surprised to the upside on inflation” and that the Fed’s “credibility was on the line.” On Thursday, Bullard said in another interview that he expected a full percentage point of federal funds rate increases by July .

The Federal Reserve is all but assured to begin hiking interest rates next month to try to rein in runaway inflation, and, although most economists would argue the move is necessary, it doesn’t come without risks.

Weekly jobless claims rose for the first time in a month , and two regional manufacturing indexes surprised on the downside.

Retail sales rebounded by 3.8% in January, more than expected and the most since last spring.

Delays and rising costs to move shipping containers are sinking hopes that the world’s supply-chain problems will ease anytime soon .

Shares in Europe fell amid continuing geopolitical tensions over Ukraine and uncertainty about monetary policy.

Germany’s DAX tumbled 2.48%, Italy’s FTSE MIB down 1.7%, France’s CAC 40 slipped 1.17%, and the UK’s FTSE 100 pulled back 1.92%.

Japan’s stock markets generated a negative return last week, weighed down by geopolitical tensions in Ukraine

Chinese markets rose modestly as supportive comments from government officials and lower-than-expected inflation data .

U.S. home sales unexpectedly increased in January , but investors paying in cash are squeezing out first-time buyers from the housing market amid record low inventory and higher prices. U.S. suppliers sharply boosted prices last month , in a sign upward pressure on already high consumer inflation continued to build at the start of the year.

Inflation is seeping through American business , hitting companies in unexpected ways beyond higher prices for materials, shipping or wages.

Santa Claus Rally

Mon, 10 Jan 2022 21:46:01 GMT

The Santa Claus Rally

“Santa Claus rally” lifted the S&P 500 to record highs as most of the major domestic indexes recorded gains in the last week of 2021.

The technology-heavy Nasdaq Composite lagged and finished flat.

The real estate, utilities, and materials sectors outperformed within the S&P 500, while the larger communication services and information technology sectors—which together account for over one-third of the index—lagged.

Despite daily coronavirus cases rising to record highs, waning fears over the omicron variant appeared

to deserve much of the credit for the gains.

Hospitalization rates remained contained
The CDC reduced the recommended quarantine period for asymptomatic people who have tested positive from 10 days to five.
Crew shortages caused by the virus led to flight cancellations and declines in airline stocks.

Evidence the latest wave of the virus was also having a milder effect on economic activity. Weekly jobless claims fell back to near five-decade lows , and continuing claims fell much more than expected and hit their lowest level since the onset of the pandemic.

An index of manufacturing activity in the Mid-Atlantic region also showed accelerating growth . Pending home sales were an outlier , surprising on the downside, as high prices and limited inventory seemed to be dissuading buyers.

Americans seemed ready to spend on goods - according to data compiled by MasterCard, holiday sales rose 8.5 percent in December versus a year earlier, the biggest gain in 17 years. Sales were also 10.7 percent higher than pre-pandemic levels in 2019. The data suggested that supply and labor challenges might be easing for retailers while also allowing them to pass on higher costs to customers.

Year to Date for 2021 Stocks and Bond Market

Retail stocks generally fared well on the news but declines in Amazon and casino and cruise ship operators weighed on the consumer discretionary sector as a whole. On Thursday, the CDC recommended against cruise ship travel, even for those who are fully vaccinated.

European stocks rose , due to easing omicron fears and optimism about the economic recovery. The pan-European STOXX Europe 600 ended last week 1.09 percent higher, rebounding more than 22% during 2021.

Japan’s stock market activity was muted, with the Nikkei 225 up 0.03% and the broader TOPIX gaining 0.28%. Sentiment was dampened by the spread of the omicron variant through community transmission in the country.

Chinese markets ended a tumultuous year with modest losses last week. The large-cap CSI 300 declined 0.2% and the Shanghai Composite shed 0.1%.

Quote for the Month: “The value of stocks, bonds, real estate, art, and cash rises and falls, but Time only becomes more valuable as we spend more of it.” ~ Barry Ritholtz

Source: “The Madison Weekly Market Wrap”, December January 2, 2022.

Supply Chain Woe's

Wed, 03 Nov 2021 20:01:43 GMT

Supply Chain Woe's Continue

Nothing embodied the promise of globalization more than the humble supply chain. Thanks to the integration of production across and within borders, consumers have come to expect infinite variety, instantly availabilitye. That is now under siege.

The world’s biggest companies are using their deep pockets, global operations and market share to insulate themselves from the supply-chain meltdown.

The S&P 500, the Dow Jones Industrial Average, and the S&P MidCap 400 hit record highs mid October, aided by a series of positive earnings surprises. Real estate and utilities stocks and health care shares led the S&P gainers , boosted by insurance providers.

Social media stocks dropped sharply following downward guidance from Snapchat parent Snap, blaming new privacy settings on Apple’s iPhones. Energy shares also underperformed after strong recent gains.

Stocks mostly moved higher. Traders appeared to be paying close attention to how higher energy and raw materials prices were affecting both third-quarter profits and future guidance.

The percentage of companies beating revenue estimates was also near record levels .

Hopes for additional fiscal stimulus also appeared to bolster sentiment.

At a CNN town hall event, President Biden said that his party was close to striking a deal and that increased corporate taxes were unlikely to be included in the legislation.

Economic data was mixed. This was especially true in the housing sector, where both housing starts and building permits came in well below expectations , while existing home sales jumped unexpectedly to their highest level since January .

Industrial production fell 1.3% in September , explained by disruptions from Hurricane Ida and ongoing supply chain issues in the auto industry.

Jobless claims fell more than consensus expectations and reached new pandemic-era lows .

Uncomfortably high inflation will grip the U.S. economy well into 2022 , as constrained supply chains keep upward pressure on prices and curb output, according to economists surveyed this month by The Wall Street Journal.

The economists’ inflation projections are up dramatically from July, while short-term growth outlooks are lower.

As of August 2021, there were slightly over 3 million excess retirements due to Covid-19 , more than half of the 5.25 million people leaving the labor force from the beginning of the pandemic to the second quarter of 2021.

Reasons:

Early retirement,
Sharp downturn in economic activity
Rising asset values, such as housing and stocks.

Source: “The Madison Weekly Market Wrap”, October 24, 2021.

Prices Up - Sentiment Down - Stocks Hold

Thu, 09 Sep 2021 18:41:37 GMT

Stocks Up - Sentiment Down - Stocks Hold

The University of Michigan’s consumer sentiment index tumbled to 70.2, it’s lowest reading since 2011.

Consumer prices continued to climb in July by 0.5% month-over-month increase in the CPI, putting prices 5.4 percent higher than July of last year.

Home prices surged as robust demand continued to overwhelm the supply of homes for sale

The median Home price for single-family existing homes was higher in the second quarter compared with a year ago for 182 of the 183 metro areas tracked. In 94% of those metro areas, median prices rose by more than 10 % from a year earlier.

U.S. equities gained ground last week as the market shrugged off the renewed spread of the coronavirus and its possible implications for future economic activity.

Stocks:

Within the S&P 500, value stocks outperformed their growth counterparts .
Energy stocks slipped Information technology stocks also lagged , driven by the pullback in the semiconductors
U.S. Treasury yields climbed , led by increases in long-maturity.
European stocks also advanced – consistent with U.S. activity.
Japan’s stock market registered modest gains
Chinese stocks also recorded modest gains.

Senate passed a roughly $1 trillion bipartisan infrastructure package , including $550 billion in new spending, aimed to rebuild transportation infrastructure, improve access to internet in rural areas, and upgrade the electric grid and water.

Senate Democrats also approved a $3.5 trillion budget resolution, to address administration priorities such as improving access to education and increasing support for families with children.

Vaccination is increasingly a requirement to be hired , as employers are asking applicants to be inoculated against Covid-19.

U.S. producer prices jumped in July , suggesting strong demand and supply chain bottlenecks are pushing costs higher.

New applications for jobless benefits declined for the third straight week, showing the labor market continues to heal despite worries about the Delta variant.

Available jobs in the U.S. rose to another record high at the end of June, pushing openings above the number of unemployed Americans seeking work.

Source: “The Madison Weekly Market Wrap”, August 22, 2021.

Labor Leads the Rebound

Thu, 08 Jul 2021 15:13:19 GMT

Labor Leads the Rebound

Jobless claims decreased by 9,000 week-over-week to 376,000 last week to the lowest level since March 14, 2020.

Available jobs climbed to 9.3 million in April, the highest in records back to 2000.

Open positions nearly matched the 9.8 million Americans who were unemployed and searching for work during the month.

The rate at which workers quit their jobs, a sign of confidence in the labor market, also rose to a record high in April, and the rate at which workers were laid off fell to a record low.

U.S. consumer sentiment rebounded in early June as inflation fears subsided and households grew more optimistic about future economic growth and employment.

Inflationary pressure: The Bureau of Labor Statistics Consumer Price Index report, showed an increase of 0.6% from April to May, and 5% year-over-year. Outpacing economists’ forecasts and the latter represented the fastest year-over-year price growth since 2008.

Inflation has not affected all economic sectors equally .

Food and shelter increased only 2.2 percent since May 2020, well within the Federal Reserve’s flexible 2% average inflation target ( though bacon is up 13%! ).
If you want to move from one place to another it’s going to cost you: Gasoline prices are up 56.2 % year-over-year
Used cars and trucks up 29.7%
Car and truck rentals up 109.8%
Airline fares up 24.1% from a year ago ,
Bicycles up 10.1%

The economy was very strictly locked down last May, leading demand for many goods and services to plummet.

Gasoline prices, are up 56.2% from May 2020, but just 3.4% from May 2019.
Plane tickets are up 24.1% from year ago but are 11.3% cheaper than they were two years ago.
However, the price of used cars and trucks skyrocketed no matter where you start the count from A fresh wave of Covid-19 clusters in Asia is creating new bottlenecks in the global supply chain , threatening to push up prices and weigh on the post-pandemic recovery.

The run-up in commodity prices is casting a cloud over the global economic recovery, slamming vulnerable businesses and households and adding to fears that inflation could become more persistent .

Source: “The Madison Weekly Market Wrap”, June 13 2021

Costs Up /Supply Down

Wed, 02 Jun 2021 17:44:14 GMT

Supply and Demand Woes

“For several quarters now executives at Home Depot and Lowe’s Cos. have faced the same old question: 'Just how much more can consumers spend on their homes?'

The answer has been consistent: “’More than you would think.’”

~ Jinjoo Lee

Unemployment benefits reached fresh pandemic lows. Applications for unemployment benefits through regular state programs dropped to 444,000 in early May.

U.S. factory activity gathers speed in May amid strong domestic demand, but backlogs of uncompleted work are piling up as manufacturers struggle to find raw materials and labor, boosting costs for both businesses and consumers.

Home prices in the U.S. have shot up in the past year , driven by limited supply, record-low interest rates, and buyer demand. Bidding wars have spread in many cities across the US, including long-neglected locales where properties typically sat on the market for months.

U.S. housing starts declined more than expected in April, a possible sign builders are constrained by rising material costs and limited supply of workers.

Deaths from the Covid-19 pandemic are the nation’s death rate to the highest level seen in nearly two decades.

Food prices have jumped by nearly a third over the past year, according to the Food and Agriculture Organization of the United Nations, even as pandemic-related job losses are making it harder for families to afford basic staples.

Americans are returning to restaurants , bars and other dining places as Covid-19 restrictions come down, adding new strains in food supply chains.

A flurry of growth in the first three months of the year returned the U.S. economy to a hair below its pre-pandemic size , and economists expect growth to pick up in the current quarter.

Source: “The Madison Weekly Market Wrap”, May, 23 2021.

Economy Bouncing Back

Thu, 29 Apr 2021 17:26:10 GMT

Economy is Bouncing Back

The U.S. economic recovery is accelerating as stimulus money, Covid-19 vaccinations, and business re-openings spur a spring surge in consumer spending, a sharp pullback in layoffs, and a bounce-back in factory output.

Retail sales jumped 9.8% in March. The gain in consumer spending — the biggest driver of economic activity — came as the government began distributing hundreds of billions of dollars of stimulus funds to households .

The government also reported industrial production rebounded in March after a decline in February. The economic readings taken together reflect people going back to work, people seeing more income, and people spending.

Nearly 200,000 fewer workers filed for initial unemployment benefits as jobless claims fell to 576,000 last week from 769,000 a week earlier.

The U.S. housing market is 3.8 million single-family homes short of the country’s demand, according to Freddie Mac.

Federal debt — incurred when the government sells Treasury bonds, bills, notes, and other securities to help cover its costs — recently hit an all-time high . The U.S. budget deficit grew to a record $1.7 trillion in the first half of the fiscal year as a third round of stimulus payments sent federal spending soaring last month.

U.S. consumer prices rose sharply in March, marking the start of an expected inflation pressures. Some of the price increases reflected temporary factors, but others showed how demand for many goods and services is reviving a year after the coronavirus pandemic shut down large swaths of the economy.

Traders welcomed exceptional manufacturing data, with a gauge of mid-Atlantic factory activity hitting its highest level in nearly five decades.

Important inflation data, consumer prices rose 0.6% in March , while core ( ex-food and energy) prices rose 0.3% , both moderately above consensus expectations. Import prices rose 1.2% in the month, also above forecasts.

Source: “The Madison Weekly Market Wrap”, April 18 2021.

More Inflation Fears

Tue, 30 Mar 2021 16:25:38 GMT

More Inflation Fears

The tension between growth hopes and inflation fears was evident in the market’s reaction to the closely watched February jobs report. The report surprised on the upside, with nonfarm payrolls rising 379,000. Nearly all the gains came in the leisure and hospitality industry, especially restaurants, reflecting reopening steps.

Traders seemed divided about whether the rise in longer-term bond yields was due to a welcome upswing in growth expectations or a worrisome increase in inflationary pressures.

Progress in the Biden administration’s $1.9 trillion stimulus package appeared to further bolster growth expectations. The Senate approved the package, however, to secure the votes of some centrists, Democratic leaders agreed to more quickly phase out direct payments to higher-income individuals. Critics of the bill continued to point to the danger of reigniting inflation by overheating the economy.

Inflation is near a decade low and well below the 2 percent level the Federal Reserve targets as ideal. The usual conditions for rising inflation—tight job markets and public expectations of rising prices—are glaringly absent. Yet anxiety about inflation is at a fever pitch , among economists and in markets, where long-term interest rates have been grinding higher since President Biden unveiled plans for huge new fiscal stimulus.

Shares in Europe closed higher in early March , buoyed by the prospect that easing restrictions to curb the coronavirus’s spread and supportive monetary and fiscal policies could set the stage for an economic recovery. However, gains were curbed by growing expectations that central banks would act to stem inflation.

Chinese stocks fell as concerns about rising U.S. yields and inflation expectations spilled across the Pacific.

Japan’s stock markets generated mixed returns in early March , with the Nikkei 225 declining 0.35 percent and the broader TOPIX gaining 1.70 percent.

Filings for unemployment benefits in the latter half of February reached their lowest level in nearly 3 months .

The average rate on a 30-year fixed-rate mortgage rose above 3 percent for the first time since July.

Source: “The Madison Weekly Market Wrap”, March 7 2021.

2020 Hindsight

Mon, 22 Feb 2021 14:49:44 GMT

2020 Hindsight

If you had fallen asleep on New Year’s Day 2020 and awakened one year later to look at market performance, you would have been incredibly pleased … and you would have missed the difficulty and the angst that was required to get to where we did.

On New Year’s Eve 2020 the bell tolled on one of the wildest years in Wall Street history, full of human tragedy, recession, massive job losses, precipitous plunges, remarkable rebounds, and record highs.

The S&P 500 returned more than 16% in 2020 , a result that seemed impossible in the bear-market days of March.

The Dow Jones Industrial Average and the Nasdaq gained 10% and 43%, respectively. The S&P and the Dow finished the year at all-time record levels despite a global pandemic, an economic crisis, and a contentious, disputed election.

As the global pandemic became clear back in March, stocks tumbled 34%. But it turned out to be the shortest bear market in U.S. history.

Since the market bottom on March 23, the S&P 500 gained 68% through year-end, shattering many

all-time records along the way. The S&P made 33 all-time highs in 2020.

Within the S&P,

Technology led the way (+41%)
Consumer discretionary (+32%)
Communications services (+21%)
Materials (+18%)
Only the energy sector was down for the year (-38%)

U.S. crude-oil prices are back near $50 a barrel after briefly dropping below $0 for the first time ever in April.

Overseas markets roughly correlated to their domestic counterparts as the pandemic was a global one.

Japan (+14%)
India (+16%)
Germany (+12%)
Brazil (-19%) suffered steep losses.

The final quarter of 2020 will primarily be remembered for the realization of at least three viable COVID-19 vaccines, a remarkable scientific achievement. Markets rallied on the prospect of an end to the global pandemic and its weighty economic impact.

The market’s gains in 2020 were driven by a handful of superstar stocks.

Three of the biggest tech giants — Apple (+82%), Amazon (+76%), and Microsoft (+42%) accounted for more than half of the S&P 500’s return in 2020.

Absent the index’s top 24 companies, dominated by tech and digital services, the S&P 500’s return would have been negative for the year.

Tesla, the biggest gainer of the year (+743%), joined the S&P 500 late in 2020.

A once little-known biotech company (MRNA +433%); while the shares of first-to-market

vaccine-maker PFE barely moved, earning a paltry 1% for the year

A video conferencing company quickly became a staple of homeschooling, office meetings, and social gatherings Zoom Video Communications, ZM, returned 400%

China electric car maker, NIO, earned more than 1,100%

Gold posted its biggest annual advance in a decade – more than 25%

If you had been in cash at the market bottom in March and stayed there, you would have

missed out on a 68 percent return on the S&P 500 through year-end.

Source: “Madison Avenue 2021 Investment Outlook", January 2021.

Investing involves risk including the potential loss of principle. Consider your risk and personal situation before investing. It is not possible to invest in an index.

Closing at All-Time High's

Fri, 08 Jan 2021 19:56:21 GMT

Closing at All-Time High's

Closing at All-Time High’s

The major domestic equity indexes closed 2020 at All-Time Highs , however ended the week mixed as small-caps recording losses.

Stocks closed out a year of solid gains led by the technology-heavy Nasdaq, notching its best annual performance since 2009.

Health care shares outperformed the S&P 500 , and consumer discretionary shares were also strong, aided by gains in electric vehicle maker Tesla.

Stocks began the week on a positive note , helped by President Trump’s decision to capitulate and sign the $900 billion coronavirus relief bill

The President repeated complaints the bill’s $600 payments to many Americans were insufficient, as well as his demand the bill include regulations on social media companies. House Democrat passed legislation to raise payments to $2,000, but Senate Majority Leader Mitch McConnell blocked it. No replacement bill emerged by the end of the trading week.

The UK became the first country to approve the use of the vaccine by AstraZeneca and Oxford University, and hopes grew that U.S. regulators would soon follow.

Slower-than-expected distribution of the Pfizer/BioNTech and Moderna vaccines may have dampened enthusiasm
Case growth in the U.S. continued to moderate after the post-Thanksgiving spike, but an increase in hospitalizations raised concerns on intensive care unit capacity in some parts of the country.

Home prices rose faster than predicted in October, but November pending home sales unexpectedly fell 2.6 percent, reflecting constrained inventories.

Weekly jobless claims were expected to increase, but fell to 787,000, the lowest level in almost a month.

New applications for unemployment assistance fell last week , a sign of modest improvement during a holiday period clouded with uncertainty around impending changes to benefit payments.

Home-price growth accelerated in October , as strong demand pushed home sales to a 14-year high.

Yield on 10-year U.S. Treasury note modestly lower , on fading likelihood of larger stimulus payments due to roadblocks in the Senate.

Shares in Europe rose , lifted by the UK-European Union (EU) trade accord and the approval of a U.S. fiscal stimulus package.

The Nikkei 225 closed the week and the year just off the 30-year closing high .

China stocks moved to multiyear highs on the anticipation of stronger growth in 2021.

Source: "The Madison Weekly Market Wrap", January 2021.

Records Everywhere

Wed, 09 Dec 2020 16:39:54 GMT

Records Everywhere

Records Everywhere

Domestic stock markets continue evidence of a strong holiday spirit.

S&P 500 saw its best November on record
Rally continued in December S&P closing all-time high Wednesday
Since March 23, S&P has rallied over 63%

The Dow closed November with its best monthly performance since 1987 , while small-cap Russell 2000 registered its best monthly gain since its inception in 1978.

Stocks started on a down note but regained momentum, seemingly helped by news that P fizer and BioNTech received approval from EU regulators for emergency use authorization of their prospective coronavirus vaccine. This makes it the first Western nation to authorize the widespread distribution of a vaccine.

Rising hopes for a new round of fiscal stimulus appeared to boost sentiment. A bipartisan group of U.S. senators proposed a $908 billion relief package , although Senate Majority Leader Mitch McConnell announced he was considering a smaller plan in the range of $500 billion.

Stocks rose after October nonfarm payrolls missed consensus expectations by almost half, the slowest pace of monthly jobs growth since the rebound from the shutdown began in May.

The housing sector showed signs of cooling , with pending home sales falling in October for the second consecutive month.

The pan-European STOXX Europe 600 ended last week with a modest 0.21% gain. France’s CAC 40 ticked up 0.20%, Germany’s DAX fell 0.28%, Italy’s FTSE MIB slipped 0.78 percent, while the UK’s FTSE 100 gained 2.87 percent, reaching nine-month highs on news the UK approved the coronavirus vaccine by Pfizer and BioNTech.

The unemployment rate fell to a pandemic low of 6.7 percent , partly due to a drop in the labor force participation rate — perhaps reflecting the need of parents to stay home as schools and day-care facilities closed in response to rising infection rates.

The share of Americans 16 years and over working or seeking work, is near its lowest since the 1970s
The labor market continues to recover even as coronavirus cases surge — though it's still millions of jobs short of the pre-pandemic level
Covid-19 is shrinking the labor market. The U.S. labor force is 2.2 percent smaller than in February

712,000 Americans filed for unemployment benefits last week on a seasonally adjusted basis, according to the Labor Department, as the job market recovery continues to slow.

U.S. shoppers spent significantly less than last year over a five-day stretch including Black Friday and Cyber Monday, as gains in online customers were offset by far fewer people visiting stores during the coronavirus pandemic.

Moody’s Analytics estimates state and local governments faced a $70 billion to $74 billion shortfall in the 2020 fiscal year . That could balloon to $268 billion in 2021 and $312 billion in 2022 absent more federal help

Goldilocks Rally

Tue, 10 Nov 2020 18:32:22 GMT

Goldilocks Rally

On November 9th - all the major media outlets called the presidential election for former Vice President Joe Biden by placing Pennsylvania’s 20 electoral votes into his column. President Trump has vowed to file legal challenges in a number of states and insists that he won the election.

With Joe Biden having the clearest path to victory and Republicans seeming likely to retain control of the Senate, traders began to anticipate a Goldilocks scenario of additional fiscal stimulus but more limited tax increases than under a “blue wave” Democratic sweep.

Domestic stocks posted their largest weekly rally since April. Bespoke reported; it was the best post-election rally since 1928, when Herbert Hoover was elected president.

The Nasdaq Composite and the small-cap Russell 2000 performed better than the S&P 500 . Value stocks outperformed high-valuation growth companies early last week, but the momentum that has driven many growth stocks higher all year took control following Election Day.

T he Federal Reserve held short-term borrowing rates near zero. They met Wednesday and Thursday but announced no changes to monetary policy. The Fed’s post-meeting statement noted that the coronavirus pandemic continues to weigh on economic growth.

The U.S. economy added 638,000 jobs in October , the latest sign that the economic recovery has slowed. The unemployment rate fell to 6.9 from 7.9 percent , according to the Bureau of Labor Statistics.

COVID-19 has surged in many parts of the country, with more than 100,000 new daily cases reported nationwide and hospitalizations rising. This widely anticipated fall wave of the pandemic caused some states and municipalities to consider adding new restrictions on consumer businesses, threatening to slow the improvement in the labor market.

Driven by election news. Indications that Republicans would retain control of the Senate led investors to revise down expectations for new stimulus spending in the new year , which could have weighed on Treasury prices.

Overseas Situation:

European equities rallied, the pan-European STOXX Europe 600 ended the week 7.02 percent higher
Germany’s DAX rallied 7.99 percent - France’s CAC 40 gained 7.98 percent - Italy’s FTSE MIB climbed 9.69 percent, and the UK’s FTSE 100 advanced 5.97 percent.
Chinese stocks also advanced last week as the prospect of a Biden presidency raised the outlook for improved U.S.-China relations. The benchmark Shanghai Composite ended up 2.2 percent and the large-cap CSI 300 rose 3.4 percent.
Japanese stocks finished sharply higher, the Nikkei 225 advanced 5.87 percent.

The pandemic is sinking one of the fast-food industry’s biggest bets: BREAKFAST. Mornings are now the slowest time of day at fast-food restaurants

While the economy still isn’t close to a full recovery, it has rebounded impressively . The growing danger, however, is that the country is facing challenges that could set it back: COVID cases are rising, cold weather is on its way and, for many American households and small businesses, financial resources are running out.

Volatile Trading

Wed, 16 Sep 2020 18:04:03 GMT

Volatile Trading

Major domestic stock show volatile trading

• Tech-heavy Nasdaq fared worst down 10% from all time high Sept 2.

• Energy shares still weak as crude oil prices fall below $40 per barrel due to Saudi Arabia cutting oil prices

Inflation data surprised on the upside with both core and headline consumer prices rising 0.4% from July.

Used Car prices largest gains in 5 decades as American shunned public transportation.
J Crew Group – one of the first retailers to file bankruptcy due to the pandemic – emerged from bankruptcy after completing it’s restructure plan.

Longer-term U.S. Treasury yields decreased on growing COVID 19 concerns. It briefly slid to levels last seen in late April, aided by strong auction demand for 10-year U.S. Treasury notes & 30-year U.S. Treasury bonds.

European stocks rise on continued economic recovery , shaking off disappointment the ECB didn’t announce additional stimulus. Pan-European STOXX Europe 600 up 1.6%; Germany’s DAX rose 2.80%; France’s CAC 40 rose 1.39%; Italy’s FTSE MIB 2.21%; and UK’s FTSE 100 up 4.02%.

Chinese A shares down 3%. Fueled by news the Trump Administration was considering adding SMIC, China’s top chip foundry, to a list of U.S. sanctioned companies dealt a blow to sentiment.

Japan, stocks showed modest gains from previous week.

1.4 million US jobs added in August and the unemployment rate fell to 8.4 % — below 10 percent for the first time since the pandemic hit.

Morning Consult economist John Leer says the U.S. workforce is splitting into two groups:

Those with a job, who are more and more confident they’ll keep it
Those who have been furloughed or fired are increasingly worried they'll get locked out of the labor force altogether.

Overall consumer spending remained 4.6 percent below pre-pandemic level .

The hidden cost of remote school: Parents quitting work to stay home with their children, a potential blow to the economy that could be big enough to rival a small or medium-size recession.

Retirement How long will I live? Investors frequently underestimate the number of years they will likely live and may fail to plan accordingly, states a new study from Morningstar.

A number of variables such as gender, income, household health, and smoking factor into longevity, the study finds even those who feel they’ll be around for 20 or 30 years after retirement may be underestimating their longevity — and not funding their golden years appropriately. Individuals would benefit by adding an extra five years to expected lifespan, while couples — who must consider that one partner will almost surely survive the other — should plan for an extra eight years .

Source: "The Madison Weekly Market Wrap", September 6, 2020, volume 7, issue 36.

This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets.

More Solid Gains

Thu, 13 Aug 2020 19:22:44 GMT

More Solid Gains

Stocks recorded solid gains last week, pushing the tech-heavy Nasdaq Composite to new highs and lifting the S&P 500 to within roughly 1.2 percent of its February record peak. The small-cap Russell 2000 outperformed by a wide margin, helping it recover some of its lost ground for the year-to-date. Industrials benefited from hopes for new aid to airlines, while health care stocks lagged. It was the last major week of the earnings season, with 132 S&P 500 companies reporting second-quarter results.

Stocks drifted higher through much of the week. Manufacturing signals remained encouraging, with July factory orders rising more than expected and the Institute for Supply Management’s gauge of factory activity surprising on the upside to reach its highest level since early 2019. The Institute’s services sector gauge also came in better than expected.

Labor market data was also encouraging. A daunting 1.2 million Americans filed weekly jobless claims, but it broke a string of two weekly increases and marked the lowest level since the onslaught of the pandemic and business closings in early March. On Wednesday, ADP announced a much smaller-than-expected rise in its tally of July private payrolls, but the Labor Department’s official July count surprised on the upside when it was released Friday — employers added 1.76 million jobs in the month, fostering a further decline in the unemployment rate, from 11.1 to 10.2 percent. The underlying data were perhaps less encouraging, with much of the payroll increase due to the timing of a seasonal adjustment to educational hiring. The labor force participation rate also dropped slightly.

The yield on the benchmark 10-year U.S. Treasury note touched a new five-month low on Thursday before increasing on Friday following the jobs report, leaving it modestly higher for the week.

European stocks rose last week on signs that an economic recovery may be gaining traction there and on hopes for more U.S. stimulus. However, escalating tensions between the U.S. and China and fears that Europe could suffer a resurgence of coronavirus cases curbed equity market gains. In local currency terms, the pan-European STOXX Europe 600 ended the week 2.03 percent higher, Germany’s Xetra DAX rose 2.94 percent, France’s CAC 40 gained 2.21 percent, Italy’s FTSE MIB climbed 2.22 percent, and the UK’s FTSE 100 advanced 2.28 percent.

Mainland Chinese markets rallied last week after data lifted confidence in the economic recovery. The large-cap CSI 300 and benchmark Shanghai Composite each posted solid gains, even after declining on Friday on news that President Trump tightened restrictions on Chinese social media networks TikTok and WeChat in the U.S. In another sign of the growing tech rift between the U.S. and China, San Jose-based video conferencing company Zoom, which gained popularity during the pandemic, said that it would halt direct sales to China and only provide video conferencing services through third-party partners. Elsewhere in Asia, following a steep decline at the end of July, Japanese stocks rallied in the first week of August. The Nikkei 225 advanced nearly 3 percent last week.

Source: "The Madison Weekly Market Wrap" , August 30, 2020, Volume 7, Issue 35.

Decidedly Mixed

Tue, 28 Jul 2020 15:42:30 GMT

Decidedly Mixed

The major domestic stock indexes ended last week mixed after surrendering gains late; at its

Thursday peak, the S&P 500 moved within nearly 3 percent of its all-time high in February. The

market rotation that began the previous week remained in evidence, with mid-caps and value

stocks regaining some of the substantial ground lost in recent months to large-caps and growth

shares. Technology stocks and the tech-heavy Nasdaq Composite fared worst, dragged down by

declines in Apple and several chipmakers. Energy stocks outperformed within the S&P 500 as oil

prices rallied early in the week.

Credit for the week’s strong start seemed to go, in part, to good news on the vaccine front.

Tuesday morning’s news of the European Union’s agreement on a massive fiscal stimulus plan

also boosted sentiment. The stimulus picture remained more clouded in the U.S., however.

Stocks turned lower Tuesday afternoon following Politico’s report that Senate Majority Leader

Mitch McConnell did not expect Congress to meet the White House’s goal of passing a stimulus

bill within the next two weeks.

Stocks took their sharpest turn lower on Thursday afternoon, led by some of the best

performing stocks in recent weeks, suggesting concerns over the concentration of risks within

the market. The closure of a Chinese consulate in Houston also seemed to weigh on sentiment.

The week’s economic data were mixed but included some cautionary signals that growth was

slowing after rebounding sharply in late spring. Most notably, initial unemployment claims from

the previous week rose from 1.31 million to 1.41 million, the first increase since March. The

unemployment data and the Federal Reserve’s targeted purchases of 20- and 30-year U.S.

Treasury bonds led to a significant decrease in longer-term yields over the week and a

flattening of the yield curve.

European shares fell last week, as the deterioration in U.S.-China relations eroded earlier gains

from the EU agreeing on a recovery fund and positive news on efforts to develop a coronavirus

vaccine. In local-currency terms, the pan-European STOXX Europe 600 ended the week 1.17

percent lower, while Germany’s DAX eased 0.23 percent, France’s CAC 40 slid 1.47 percent,

Italy’s FTSE MIB declined 1.25 percent, and the UK’s FTSE 100 fell 2.38 percent.

In Asia, Japanese stocks were relatively unchanged in a holiday-shortened trading week there.

Mainland Chinese stocks declined modestly for the week. The large-cap CSI 300 declined 0.9

percent and the benchmark Shanghai Composite shed 0.5 percent, weighed down by Friday’s

sell-off on news that the Trump administration withdrew consent for China to operate its

consulate in Houston. This unexpected decision rattled those who viewed it as an aggressive

move that would ratchet up bilateral tensions at a time when China’s economic recovery

remains fragile.

Source: "The Madison Weekly Market Wrap" , July 12, 2020, Volume 7, Issue 28.