December 1st, 2022
I won’t lie to you, I miss writing these updates on a weekly basis. But our newborn demands his father’s presence! And, wow, what a special time these first 6 weeks have been. For those of you that have reached out and congratulated us, thank you so much. I hope you had a wonderful Thanksgiving – the team and I at AOW are sending you all the blessings through the rest of the holiday season and into the New Year.
I do plan to return to weekly updates sometime in the new year, but for now, below is your AllOne Monthly Market & Economic Update by the numbers.
Interested in learning more? Schedule a call with me HERE.
Warmly,
Mark S Sauer
Economic Update
PPI & PCE, FOMC Minutes, Consumer Strength, Earnings Update & Ukraine Conflict
Market Update
Global Equities, Fixed Income & Commodities
Global Equities: Markets were up big for the month. The S&P 500 gained 5.57%, the Nasdaq rose 6.27%, and the Dow Jones Industrial Average finished up 5.93%. Developed International stocks outperformed gaining 11.59% throughout the month, while Emerging Markets were up even more so at 12.43% despite China’s continued struggles COVID-19 outbreaks, the zero tolerance policies, and protest.
Economic Update
PPI & PCE, FOMC Minutes, Consumer Strength, Earnings Update & Ukraine Conflict
Producer Price Index (PPI) & Personal Consumption Expenditure Index (PCE): The October reading of the Producer Price Index followed the recent trend of improving inflation data, rising just 0.2% month-on-month and 8.0% annually. Ex-Food and Energy, PPI was up 6.7% on the year and flat for the month. Today, 12/1/22, the Personal Consumption Expenditures (PCE) was reported to have declined to 6% on a yearly basis in October from 6.3% in September. This reading came in below the market expectation of 6.2%. While Core PCE Price Index – the Federal Reserve’s preferred gauge of inflation – declined to 5% from 5.2%, as expected. Further details of the publication revealed that Personal Spending and Personal Income rose by 0.8% and 0.7%, respectively, on a monthly basis in October. While the data is a positive sign that the Fed’s rate hikes are working, the Fed is looking for several more readings to confirm the trend before it will consider ending its tightening campaign.
Charts of the Month
S&P 500
Our first Chart of the Month is a weekly view of the S&P 500 Index, which is retesting the 50-week moving average (blue line) after a successful test of the longer 200-week moving average (red line). A move up to retest the 50-week line would be bullish as it would also mean a break above the purple trendline connecting recent peaks in the weekly chart. Moreover, this range coincides with a big supply/demand level (green line) making this level both challenging to overcome, while also an exciting moment whereby we may see the trend for the year change. The direction of the next move for the S&P 500 index will likely depend on how today’s release of Core PCE Inflation is received.
Producer Price Index (PPI)
Next is a one-year look at the monthly change in the Producer Price Index (PPI) excluding Food and Energy. PPI has been softening more quickly than the Consumer Price Index, which makes sense as lower input costs eventually trickle down to finished consumer goods. While PPI ex-energy has been easing for several months, October was the first time we saw an actual flat reading rather than a lesser increase. Hopefully, the trend can continue to end the year and we see a negative inflation print, which would be a tremendous confidence boost for investors growing skeptical that the Fed has the tools needed to halt inflation.
