For Week Ending September 16th, 2022
Headlines reading the same story, folks: Recession impending and inflation is ramped.
Yet I’m still of the mind that we are seeing progress in the way of inflationary data. And, we’re already in a recession – a recession doesn’t have to look like a 2008 event – so don’t let them tell you the sky is falling. It has already fallen! The Fed is doing it’s work to turn the ship and the economy may be a little more bumpy in the coming months. However, it’s still my opinion that we’ll see market conditions shift positively in Q4.
Below is your Weekly Market & Economic Updated by the numbers.
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Warmly,
Mark S Sauer
Market Update
Global Equities, Fixed Income & Commodities
Global Equities: The prior week’s gains were quickly erased as stocks sank back into the bear market downtrend following yet another hot inflation reading. The S&P 500 fell –4.7% during the week, the Nasdaq plunged –5.5%, and the Dow Jones Industrial Average retreated -4.1%. Developed International markets were -3.3% lower while emerging markets dipped -3.1%.
Economic Update
Inflation Data, 1% Rate Hike & FedEx calls for Recession
Inflation Data Disappoints: Highly anticipated inflation data this week failed to instill investors with confidence that the Fed is making effective progress on combatting inflation – particularly the Consumer Price Index (CPI) data. The CPI report showed a headline year-on-year rate of 8.3%, down from July but higher than anticipated and up 0.1% in the monthly period. The biggest disappointment was that the Core reading, excluding food and energy, rose from 5.9% to 6.3% as consumers paid higher costs for lodging and services. A separate report on Producer Prices showed inflation easing a bit, from 9.8% in July to 8.7% in August.
Chart of the Week
Rate Hike Expectation
Our first Chart of the Week shows the rate hike expectations for the September Federal Open Market Committee meeting, comparing current expectations (blue) to those from one week (light grey) and one month ago (dark grey). While baseline expectations remain at 75 bps, with the CPI data release, the outlier expectations shifted dramatically from 50 bps to 100 bps. The Fed will meet Tuesday and Wednesday to decide their next move.
S&P 500 Resumes Down-Trend?
Our second Chart of the Week is the S&P 500 breaking a crucial level – 3900 (green line) – indicating further market deterioration and a higher the potential of retesting June’s lows (purple line).
Nasdaq Holds Line in the Sand?
Our final Chart of the Week is the Nasdaq still holding its crucial line in the sand (green line) preventing the Nasdaq from also falling into dangerous territory.
