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.
November was yet another interesting month for the U.S. Unemployment came in at 4.2%, ticking up from October’s 4.1% (getting better for businesses looking for help and near historical lows). Inflation (CPI) ticked up year over year to 2.7% in November versus the prior month of 2.6% (housing and used cars still holding us up) and still in the right direction for the Fed’s target of 2% vs highs of 9.1% in 2022. We could see interest rates drop by as much as 2% by this time next year as the economy continues to slowly expand.
On the international front, thoughts of recession have changed to slow growth. The Eurozone Markit PMI Manufacturing SA came in at 45.2 for November (no change is better than down), Unemployment Rate for October was unchanged at 6.3% (flat is better than up), and Retail Sales CA year over year for October came in at 1.9% down from the prior month (positive is still good). In Asia Pacific economies: Japan’s Markit/JMMA PMI (Purchasing Managers Index) Manufacturing SA came in at 49.0 for November below expectations (not great), GDP (final) year over year came in at .5% for the 3rd quarter (a good size jump from the previous quarter). China’s Markit/Caixin PMI Manufacturing came in at 51.5 for November (a good surprise), CPI (inflation) came in at .2% year over year for November (inflation is slowing across the globe). Australia’s Retail Sales SA came in at .6% month over month for October (starting to see some acceleration), GDP (how the economy is doing) for the 3rd quarter came in at .8% (positive is a good direction), and NAB Business Confidence for November fell off a truck at -3.0 a complete reversal from the previous month (not great). 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) was up 5.96% +/- in November, adding in a big way to October’s -.89% +/-, and up 26.77% +/- for the year (Wow!!). As we enter the holiday season, we could experience rising markets for the next couple of months and experience what some call the “January effect” where markets rally in expectation of higher prices in January. I feel that markets are valued a little high, but still lower than levels experienced in 2021. 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 Gull Foss Falls
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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