Wow that went fast! It’s September already and I haven’t yet put away my winter coats. Well, in this case procrastination is my friend. And if you were thinking about getting out of the stock market but didn’t, procrastination is your friend, too. In August, the Dow Jones Industrial Average rose 3.2%, the Standard & Poor’s 500 climbed 1.9%, and the Nasdaq Composite Index was 1.6% higher.
Why? Starting with Federal Reserve Chairman Jerome Powell’s cryptic announcement at Jackson Hole about ten days ago, investors have begun to expect an interest-rate cut at the Fed’s next meeting in mid-September.
But wait! There is new inflation data to parse. On Friday, the Commerce Department announced the Personal Consumption Expenditures Index (PCE) – which showed that prices rose 2.6% in July – the same as in June. But Core PCE, which excludes food and energy, showed inflation at 2.9% – the highest since February. With the Fed’s inflation goal at 2%, we would normally expect interest rates to stay the same, or even rise slightly.
One of the Fed’s other responsibilities (besides being pro-growth and anti inflation) is to keep us near full employment. The last big jobs report we got (for July) showed weakened hiring, except in the health and care-related sectors. Is it wrong to assume that aging Baby Boomers are responsible for this? Coming this Friday is the August jobs report, which we will await with bated breath. (Not really going to bate my breath, but….)
As you know, American consumers’ spending drives our economy. But there are signs that consumers are feeling the pinch. According to Reuters, “U.S. consumers with the highest credit scores are starting to fall behind in debt repayments.” And per Bloomberg, “Once rare, seven-year car loans are fast becoming the norm in the U.S.” The average sales price of a new car is now approaching $50,000
Smuckers, which owns Folgers, said it would continue to increase coffee prices to help offset tariff costs – joining Hormel, Ace Hardware, Walmart and other retailers who have said the same.
It’s not just surcharges on retail prices that are hurting people. It used to be that you could mail anything worth less than $800.00 to the U.S. and not pay a duty. Now at least 25 countries have discontinued U.S.-bound postal deliveries in response to the end of the $800 duty-free exemption. I am admitting nothing, but for those of us who count on cheap imports, this is going to be tough, and for small companies that also depend on exporting to us cheaply, this is devastating.
The House of Representatives is back in session after a month’s recess. And while the topic du jour when they left was the Epstein files, the driving concern now is the government shutdown that’s coming on October 1st unless Congress acts. And by act, I mean kick the can down the road, not actually solve the problem.
This is not investment advice! But the next Powerball drawing will be worth more than $1.3 billion with a lump-sum payout option near 500 million dollars. Your odds of winning the grand prize are one in 292.2 million. Pish posh. You can afford the three dollars. Just remember me when you win.
For the week ending on August 29th, the S&P 500 closed at 6,460, the Nasdaq at 21,455, and the Dow Industrials at 45,544. The yield on the ten-year Treasury Note was steady near 4.22%. U.S. crude oil cost $65.78 per barrel, N.Y. gold cost $3,488.29 per ounce, and one Euro was worth $1.16.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, Morning Brew, Axios, The Wall Street Journal, Bloomberg, CNBC, The Associated Press, Reuters, Business Insider, CNN, The Washington Post, Fortune, The Economist, and 1440 Digest. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.
Excited to buy a new house, but not absolutely certain that this one is it? Ask to spend the night! More and more potential buyers are asking for a sleepover before they make a bid. And owners are inviting them in. According to the Wall Street Journal, this is most common with VERY EXPENSIVE homes, where the owners can afford to move out and the buyers can afford to pay an outlandish rent. Sometimes the sleepover lasts months! The owners typically leave their cars and staff in place. This would never work if I were selling my home, because I AM the staff!