At TM3 Wealth, it is important that you are well informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month. If you have any questions or would like to continue the conversation, please reach out.
Inflation slowed to “just” an 8.5% annual increase in July, down from 9.1% in June and 8.6% in May. On a month-over-month basis, prices were pretty much flat1. Relief at the gas pump was a major driver of the slowdown with gas falling 7.7% and overall energy falling 4.6% in July. However, food and shelter continue to be major sticking points in the inflationary story with food prices increasing 1.1% in the month and shelter increasing 0.4%. Despite the good news, it’s not likely a big enough move in the right direction for the Fed to change course, with the market relatively split on whether the Fed will hike 50 or 75 basis points in September2.
Even though recessionary fears are real, the labor market continues to chug along with over a half million new jobs added to the US economy in July3, making it the second-best month of job creation this year. The reported numbers more than doubled the expectation of 250K new jobs, based on a Bloomberg survey of economists. Further, the report finally put total employment above pre-pandemic levels. The continued hot labor market may squash some of the recessionary headlines, though it may also make the Fed’s job of combatting inflation a bit more difficult as average hourly earnings grew 0.5%, compared to 0.4% in June.
Another piece of good news is consumer sentiment has improved over the last couple of months. In June the University of Michigan survey showed historically low levels of consumer confidence in the economy. The preliminary reading in early August showed sentiment improved to 55.1, versus June’s 50.04, though it remains below even the worst readings during the 2008 Global Financial Crisis. Improving future expectations drove the gain, offsetting a more pessimistic view of current conditions.
The bottom line: Headline inflation improved with the help of falling energy prices, though inflation remains significantly above anything comfortable for the Fed. The robust gains in the job market may calm near-term recession fears and bode well for the overall economy, but it could make the Fed’s job of taming inflation more difficult. The Fed will continue to try to thread the needle and achieve a soft-landing of attempting to tame inflation while cooling the economy, though not hurting it.
—
Sources:
1. Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
2. CME FedWatch Tool, as of 08/12/22, https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
3. Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
4. University of Michigan
Disclosures
The material presented includes information and opinions provided by a party not related to Thrivent Advisor Network. It has been obtained from sources deemed reliable; but no independent verification has been made, nor is its accuracy or completeness guaranteed. The opinions expressed may not necessarily represent those of Thrivent Advisor Network or its affiliates. They are provided solely for information purposes and are not to be construed as solicitations or offers to buy or sell any products, securities, or services. They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Thrivent Advisor Network and its affiliates accept no liability for loss or damage of any kind arising from the use of this information.
Investment advisory services offered through Thrivent Advisor Network, LLC., a registered investment adviser and a subsidiary of Thrivent. Clients will separately engage a broker-dealer or custodian to safeguard their investment advisory assets. Review the Thrivent Advisor Network ADV Disclosure Brochure and Wrap-Fee Program Brochure for a full description of services, fees, and expenses. Thrivent Advisor Network LLC advisors may also be registered representatives of a broker-dealer to offer securities products.
This communication may include forward looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could’” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.
Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.
The Michigan Consumer Sentiment Index (MCSI) is a monthly survey of consumer confidence levels in the United States conducted by the University of Michigan.
The CME FedWatch Tool is a tool created by the CME Group (Chicago Mercantile Exchange Group) to act as a barometer for the market’s expectation of potential changes to the fed funds target rate while assessing potential Fed movements around Federal Open Market Committee (FOMC) meetings.
TM3 Wealth is a part of Thrivent Advisor Network, LLC (“Thrivent”), a Registered Investment Adviser (“RIA”), located in the State of Minnesota. Thrivent provides investment advisory and related services for clients nationally. Thrivent will maintain all applicable registration and licenses as required by the various states in which Thrivent conducts business, as applicable. Thrivent renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.
Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. TM3 Wealth and Thrivent Advisor Network, LLC are not affiliated companies. Information in this message is for the intended recipient[s] only. Please visit our website www.tm3wealth.com for important disclosures.
