As you work to build a financial future for yourself and the ones you love, it is beneficial to have a perspective on the world around you and the outside factors that may impact how your wealth can grow and thrive in a global economy.
September was yet another interesting month for the U.S. Unemployment notched down to 4.1%, a bit lower than August’s 4.2% (still good for workers, better than it was for businesses looking for help, and near historical lows). Inflation (CPI) ticked down year over year to 2.4% in September versus the prior month of 2.5% (slower rate of increase means we are moving back to normal, who would have thought) and moving even closer to the Fed’s target of 2% and the Fed may lower rates again next time. Unless I have bumped my head, we could see rates drop by as much as 2% by this time next year.
On the international front, thoughts of recession have changed to slow growth. The Eurozone saw CPI EU Harmonized year over year (Flash) plummet to 1.8% in September (now that increasing inflation has eased, it’s back to work), PPI (producer price index) NSA year over year at -2.3% (still rolling downhill, actual sign of decreasing inflation), and Retail Sales CA year over year come in at .8% (positive is a good economic sign), and Industrial Production WDA year over year was up .10% for August (baby steps and miles away from the last measurement of -2.1%). In Asia Pacific economies: Japan’s unemployment dipped to 2.5% for August (this low of unemployment can cause inflation) and Retail Sales NSA year over year was at 3.1% for August (spending helps both domestic and global economies). China’s CPI (inflation) came it at .4% year over year for September (don’t worry ours is still coming down too). Australia’s Retail Sales SA month over month jumped to .7% from .06% (a good sign for economic growth). As a result of U.S. companies deriving 40% +/- of earnings from outside this country and the current strength of the U.S. economy, I still feel investment in stocks will continue to favor the U.S. in the coming months with most markets outside the U.S. continuing to play catch up.
The market (measured by the S&P 500 ETF, SPY) gained 1.79% +/- in September, adding to August’s 2.34% +/-, on pace for a great year, and up 20.71% +/- for the year. I expect markets over the next couple of months to fluctuate in the 2-5% range, mostly sideways to down, as we enter earning season. At AWMS, we still own equities/stocks for the same reasons we always have for their long-term growth and consistent dividend cash flow. Although markets can be volatile at times, dividend and interest payments continue to pour in like Havasu Falls.
If we look at the forest despite the tree, we see over the past year the U.S. economy still motoring along at a reasonable clip whereas the whole world, it seems, slowed down a lot. Although the U.S. economy may be slowing a bit, not to be confused with not growing, the rest of the world continues to pick up steam little by little. Fun fact: US oil production in January 2020 was 12,852 thousand barrels a day and July of this year was 13,205 million barrels a day, https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m (not bad for the largest producer of oil in the world ever!, https://www.eia.gov/todayinenergy/detail.php?id=61545).
Please continue to make healthy decisions like washing your hands, getting plenty of sleep, eating balanced meals, staying hydrated, and taking a stroll if you feel like it. Reach out to a friend or loved one and have a great conversation.
Until next time, be well and keep putting one foot in front of the other. If you are not a client and would like to receive our newsletter or our monthly blog update, please use the contact tab on our website and drop us an email.
Sincerely,
Thaddeus Phelps, CEO/CIO
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