Obsidian Market Update 08/12/2023
Economic Update
An End to the Dog Days of Summer?
According to The Old Farmer’s Almanac, yesterday (August 11) was the last Dog Day of Summer. The ancient Greeks and Romans believed that men could be driven mad by the extreme heat of these forty dog days. Today, the phrase simply refers to the peak of summer’s temperatures and humidity.
The historical expectations of stock market performance in August have also changed. From 1896 to 1986, the Dow Jones Industrial Average (DJIA) during August beat other months by 1.4 percent. Since 1986, however, every other month has beat the August average by 1.7 percentage points. Will 2023 break or continue the streak? Let’s look at a few indicators.
U.S Consumer Confidence
On July 25, The Conference Board reported that its Consumer Confidence Index® rose to its highest point since July 2021 “across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000.” Regarding a possible recession, “The proportion of consumers saying recession is ‘somewhat’ or ‘very likely’ to occur ticked up in July, . . . Still, recession expectations remained below their recent peak, suggesting fears of a recession have eased relative to earlier this year.”
IMF Forecast
Also on July 25, the International Monetary Fund (IMF) released its World Economic Outlook Update. The IMF upgraded its 2023 forecast for growth, noted the significant decrease in global inflation (from 8.7 percent in 2022 to 5.2 percent in 2024), and cited numerous positive developments that reduce overall risk of financial sector turmoil; namely, the resolution of the debt ceiling standoff in the U.S., and decisive actions by the central banks of both the U.S. and Switzerland to rein in inflation.
U.S. Interest Rates
On July 26, the Federal Open Market Committee of the Board of Governors of the Federal Reserve System raised the target range for the federal funds rate to 5.25 to 5.5 percent. Board Chairman Jerome Powell reiterated the Fed’s commitment to return inflation to its 2 percent objective, so there could be more rate increases ahead.
U.S. Jobs Report
The numbers for the July jobs market showed 1) the addition of 187,000 jobs, 2) a decrease in the unemployment rate to 3.5 percent (a near record low), and 3) a prime-age participation rate of people between the ages of 24 and 54 of 83.5 percent.
U.S. Wages
Finally, on July 29, The Bureau of Labor Statistics reported that wages and salaries of U.S. workers in June outstripped the 3.0 rate of inflation. Wages increased 4.6 percent for the 12-month period ending in June 2023 and 5.3 percent for the 12-month period ending in June 2022.
The Big Picture
The US economy is performing far better than most analysts expected. While possibility of a recession remains, few are predicting it to be imminent. Inflation is coming down, though increasing wages may slow or halt the decrease if American consumers decide to spend.
How will the U.S. markets respond to these indicators? As always, we’re watching these and other indicators as well as market performance. If you have any questions, please don’t hesitate to contact us.
Lifestyle
National Farmers Market Week Ends Today!
August isn’t just about heat and humidity. It’s the month for fresh corn, blackberries, okra, green beans, peaches, basil, eggplant, cucumbers and so much more! Farmers markets are in full swing with some of the best produce we’ll see all year. Many of us have our favorite markets, but if you’d like to explore, check these out:
TD Ameritrade to Schwab
Six More Days!
If you currently receive statements from TD Ameritrade, please take a moment to read this article and a more detailed version in our July 8 newsletter.
On August 1, Schwab sent information to our clients who had been receiving statements from TD Ameritrade about accessing accounts at Schwab. You have from now until August 18 to make changes to your TD Ameritrade accounts, such as delivery preferences (email or paper notices) and personal information (e.g., address, phone number, and email address). The information associated with your TD Ameritrade accounts as of August 18 will be transitioned to Schwab during Labor Day weekend. Of course, you can change account information after the transition.
If you have any questions, please don’t hesitate to give our office a call.
How We Help
Four Ingredients for a Confident Transition to Retirement
Recently we met with several families contemplating retirement by the end of 2023. Naturally, mixed with the excitement of beginning a new time of life is a bit of anxiety. Making the transition from accumulating and earning income to living off distributions of income can take some getting used to. Helping you make that transition with as little anxiety as possible is one of the reasons we do what we do.
- We plan, knowing that circumstances constantly change, and every financial plan is a work in progress.
- We consistently monitor the performance of your portfolio and test it using multiple scenarios to evaluate its ability to meet your goals.
- We meet and talk with you regularly to stay abreast of your goals, needs and wants.
Plan, monitor, test, and communicate are four ingredients of confident transition to your next great adventure.
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.