December 2025 Financial Market Update

Presented by Marc Aarons

I hope you had a great holiday weekend! Last month looked calm on the surface, but proved more nuanced. U.S. markets spent most of November near record highs before losing momentum as AI enthusiasm met earnings reality, Fed officials tempered rate-cut expectations, and a government shutdown left investors with less economic data than usual.

The month crystallized around three themes. First, the evolving macroeconomic backdrop presented challenges, with labor market data gaps and mixed inflation signals. Second, the government shutdown and Fed messaging reshaped rate expectations. Finally, dominant AI players, housing trends, and broader sector rotation (the movement of stock market investment from one industry to another) defined the year-end investment landscape.

Major U.S. Stock Indices

November’s mixed performance reflected shifting Fed rate-cut expectations and sharp rotations in AI and mega-cap tech (tech companies with market valuations over $200 billion). Renewed hopes for easier Fed policy fueled late-month rebounds, though profit-taking in stretched tech leaders capped overall gains.

• The S&P 500 edged up 0.13%.
• The Nasdaq 100 declined 1.64%.
• The Dow Jones Industrial Average gained 0.32%.

Macro Backdrop & Policy

• November’s macro story was defined by what didn’t happen: government data. The 43-day federal shutdown erased October’s Consumer Price Index (CPI) entirely and pushed the payrolls report into December, leaving investors and the Federal Reserve navigating in fog with no clarity on near-term inflation or labor momentum.
• In that vacuum, Fed voices set the tone. Vice Chair Philip Jefferson argued the October rate cut nudged policy closer to neutral. In contrast, Governor Christopher Waller backed another quarter-point cut in December, insisting inflation is gliding toward 2%, the labor market is cooling, and he wasn’t worried about a snapback.
• But the late-October Federal Open Market Committee (FOMC) minutes revealed a central bank split down the middle. Several officials felt the October cut overshot, and many wanted rates on hold through 2025 unless growth weakens. With September inflation still running around 3% and core inflation (which removes volatile food and energy) stuck near 0.3% month-over-month, price pressures remain stubborn enough to keep hawks uneasy and doves pressing their case.

Labor Market & Inflation 

• With October’s household survey never collected, markets head into December flying blind on the unemployment rate during the shutdown. The Bureau of Labor Statistics (BLS) will deliver a combined October and November payroll print and a refreshed unemployment rate in mid-December — a report that now looms large for the December FOMC meeting.
• On inflation risks, Fed officials flagged competing forces. AI-driven investment is giving productivity a lift, but shifting policies on tariffs and immigration threaten to tighten labor and goods markets. The push and pull leaves the inflation outlook muddier heading into year-end.
• Cleveland Fed President Loretta Mester sharpened this cautionary tone on November 6th, warning that while Gross Domestic Product (GDP) and unemployment hover near long-run norms, inflation has edged higher again. With policy rates now a half-point lower than in August, she argued the Fed’s stance is less restrictive and may exert “less downward pressure” on inflation.

Housing Market

• Existing-home sales held at a 4.1 million annual pace in October, with the median price at $415,200, up modestly year-over-year. Inventory remained tight at 4.4 months of supply, while U.S Federal Housing data showed national prices up 2.2% year-over-year in Q3 before stalling in September.
• Importantly, the rise in home prices this year masks sharp regional divergence: gains in Connecticut and New Jersey offset declines in Florida and D.C., while softness spreads beyond isolated markets. Sellers are capitulating as October saw a surge in delistings and record price cuts.
• Forecasts point to gradual recovery through 2026, but the current reality is extended listings, thinner volume, and buyers back in the driver’s seat.
• Note that the typical U.S. homebuyer is nearing retirement, with the median age hitting 59, while first-time buyers now average a record 40 years old. High prices, elevated mortgage rates, and thin inventory are locking out younger households, while favoring older, equity-rich repeat buyers.

The Path Forward

November’s mixed signals offer important guideposts. The Fed is easing, but divided views and noisy data make aggressive bets premature. Meanwhile, AI and mega-cap tech continue driving profits, though recent volatility underscores the need for selectivity. With data disruptions elevating the value of regular economic metrics, the Fed’s rate decision on December 10th and AI companies’ progress updates will serve as critical economic checkpoints.

The environment calls for balance: staying diversified, managing risk thoughtfully, and focusing on the long-term. As always, I’m here if you have any questions or concerns as the end of the year approaches.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

Investment advisory and financial planning services are provided by Money Managers, Inc. a registered investment advisor.  Our CRD Number is 151602.  To access our most recent version of our Form ADV, Form ADV Part 2A and privacy policy, visit https://adviserinfo.sec.gov/. This information is for educational purposes only.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

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Financial Market Update – Week of 04/28/2025

Presented By Marc Aarons

Last week brought strength in technology stocks via earnings and some tariff rhetoric relaxation, making it an opportune time to share an overview of what happened and what’s ahead. Read on for a bite-sized summary of what you should know.

Weekly Stock Index Performance

Major U.S. stock indexes bounced back last week, with strong tech earnings setting the tone after a volatile start to the week last Monday.

• The S&P 500 rose by 4.59%.
• The Dow Jones Industrial Average increased by 2.48%.
• The Nasdaq 100 soared by 6.43%.

Tech Strength & Earnings

• Tech led the way last week with solid earnings results from Alphabet (Google).
• According to data from Factset released on April 25th, with 36% of S&P 500 companies reporting results so far, 73% showed a positive earnings per share surprise, and 64% reported a positive revenue surprise.
• So far, the blended year-over-year earnings growth rate for Q1 2025 is 10.1%. If 10.1% ends up as the final number once all S&P 500 companies report Q1 earnings, it will mark the second consecutive quarter of double-digit growth for the index.

Easing Tariff Rhetoric

• Tariff talk was on the softer side last week, standing as a partial catalyst for market sentiment rising.
• Last Friday, reports emerged that China quietly rolled back tariffs on U.S. semiconductors, easing pressure in the tech sector as tech stocks rallied.

Consumer Sentiment Sours Further

• Data compiled by the University of Michigan showed consumer sentiment diving in April to one of the lowest numbers on record, making it four months in a row for souring consumer sentiment
• While that might sound concerning, the number was better than expected, with the reading showing 52.2 versus the 50.8 forecasted.

The Week Ahead

• Earnings season is in full swing, and it’s earnings week for the “Magnificent 7.” We will get results from Microsoft. Amazon, Meta, and Apple — so it’s the biggest week of the earnings season.
• In addition, there are plenty of economic data releases: quarterly Gross Domestic Product (GDP) data, the Fed’s favorite inflation indicator in the form of Core Personal Consumption Expenditures (PCE), and the monthly employment number on Friday.

That’s it for this week’s update! If you’d like to explore any of these topics further or have any other questions or needs as the week unfolds, don’t hesitate to reach out. I am always here as a resource for you.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

Investment advisory and financial planning services are provided by Money Managers, Inc. a registered investment advisor.  Our CRD Number is 151602.  To access our most recent version of our Form ADV, Form ADV Part 2A and privacy policy, visit https://adviserinfo.sec.gov/. This information is for educational purposes only.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed her

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Financial Market Update – Week of 12/16

Presented by Marc Aarons

Major U.S. equity indexes traded in a mixed fashion last week as investors interpreted fresh November consumer and wholesale pricing inflation data. Strength was featured in tech last week, with Broadcom making headlines on a deal struck with Apple to make chips designed for AI. 

With fresh inflation data marking the first down week in four for the S&P 500, it is the perfect time to keep you updated on the latest developments.

For the week ending 12/13/24, the S&P 500 fell by 0.64%, the Nasdaq 100 was higher by 0.73%, and the Dow Jones Industrial Average declined by 1.82%.

Inflation Picture

Consumer Price Index (CPI): Monthly Increase

The proverbial “last mile” in the inflation fight is proving to be longer than many would like to see. November CPI data was mostly in line with estimates, even as it showed a 0.3% gain for the month, bringing the yearly rate to a rise of 2.7% versus 2.6% in the previous reading.

Stubborn economic segments, including shelter and services, continue to contribute to sticky monthly inflation readings — but at least we see some deceleration in shelter pricing. Although CPI and PPI are still above the Fed’s 2% annual target, markets didn’t seem to mind too much last week, with the December rate cut probabilities rising after the data release.

November Core CPI (removes food and energy from the metric) also rose in line with estimates, showing a yearly 3.3% gain again, equating to a 0.3% monthly rise.

The verdict? Overall, recent monthly data may be construed as inflation being stuck in a range of sorts — certainly exhibiting a pattern of being down from the 2022 highs but still stubbornly above the Fed’s annual target rate of 2%.

While consumer inflation is not super low and continues to have sticky pockets, markets reacted mostly positively, as the probability of a December rate cut was virtually cemented after the data was released.

Producer Price Index (PPI): Simmering

After the mostly in-line CPI print on Wednesday raised the odds of a December rate cut and was received positively by equity markets overall, Friday gave us the November PPI data. Data showed wholesale pricing running hotter than expected in November, showing a monthly acceleration in producer pricing of 0.4%, higher than the Dow Jones estimate of 0.2%.

Looking at yearly data, wholesale pricing data for November increased by 3.0%. So, while consumer pricing was warm but in line with expectations, the wholesale pricing data was a bit hot. No victory laps on inflation as a whole just yet!

It’s the food – wholesale food pricing showed an outsized monthly gain that accounted for a large percentage of the gain in goods pricing.

Egg prices are approaching all-time highs made during the pandemic (not this again!). Bird flu was cited as the catalyst.

Treasury Yields Rise

 As major stock indexes traded mixed for the week on rather warm overall inflation data, the 10-year Treasury yield rose every day last week. While expectations for a rate cut this week from the Fed are clear, rate cut aspirations for 2025 seem to be lessening as inflation is proving stubborn in the last mile.

Ten-year note yields rose by about 7.5 basis points last week, closing near 4.399% last Friday. The psychologically crucial 4.50% level is once again in sight.

Rate Cut Aspirations?

 The December Fed meeting is this Wednesday, December 18th, and the markets are showing a 96.0% chance of a 25-basis-point rate cut as of last week’s market close, according to the CME FedWatch Tool.

But the outlook for 2025 is a bit different at this time. The thought process is that inflation has been sticky, resilient, and still above the Fed’s 2% target. Uncertainties about the new presidential administration’s policies and their potential impact on inflation naturally exist.

 Some market watchers are talking about two rate cuts in 2025, but it is always difficult to predict what may happen so far in advance. A year is quite a long time in financial markets.

Given the freshness of last week’s inflation data, traders and investors will be paying attention to Federal Reserve Chair Jerome Powell’s post-rate decision press conference on Thursday for additional clues or confirmations on the Fed’s mood.

 Looking Ahead

Once again, it is all about the Fed this week. Markets have baked in expectations for a 25-basis-point cut, so barring any surprises, attention will be on the policy statement and clues surrounding future Fed inclinations.

Uncertainties surrounding future policies from a new administration exist, and inflation has been percolating. It is not apparent by the recent upward trajectory in most major U.S. stock indexes. Could the markets be a bit too relaxed at this time? Time will tell as we approach the end of the year.

 December is historically a good month for stocks (especially during election years), yet we have had a heck of a run year-to-date. Let’s be mindful of any potential pullbacks that could create potential long-term opportunities as we approach year-end and the inauguration in January. 

 As always, if you have any thoughts about stocks, interest rates, dividends, or anything else, feel free to reach out to me. We can connect, discuss, and exchange ideas.

 I am always here as a resource for you.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

The post Financial Market Update – Week of 12/16/2024 appeared first on Money Managers, Inc..

Presented By Marc Aarons

Holidays & S&P 500 positive days

Hope all is well with you. Pending elections, “higher” interest rates, and labor market questions, there was a bit of uncertainty heading into November. 

 But that uncertainty was short-lived. The presidential election was settled and the November Fed meeting was in the books by early November. And November was a fantastic month for long-term investors!

 With the presidential election out of the way and market sentiment rocketing, now is the perfect time to keep you informed about the latest developments as we head into the final month of 2024.

 Major Stock Indexes

 November was good for long-term investors in U.S. stocks, with a continuing bid in U.S. equities leading up to and continuing after the presidential election. That makes it six out of the last seven positive months for the S&P 500 and eleven out of the previous thirteen — I think we will take that!

 Overall, for the month of November, the S&P 500 added 5.73%, the Nasdaq 100 tacked on 5.23%, and the Dow Jones Industrial Average led the way — higher by 7.54%.

 Federal Reserve (Fed) Rate Decision

 November kicked off with the Fed policy meeting on November 7th, as the Fed cut the overnight lending rate by 25 basis points in line with market expectations, with the next day’s presidential election on everyone’s mind. 

 The recent decision follows the central bank’s significant 50 basis point cut in September and brings the current target lending rate range to 4.50% – 4.75%. 

 The vote for the rate cut was unanimous, with this action aiming to support the labor market.  Additional data is needed for the Fed to assess the current state of inflation to determine policy action going forward.

 As of market close on November 29th, markets favored another 25-basis-point cut (66% probability) at the December 18th meeting and a 34% chance of no change in rates, according to the CME FedWatch Tool.

Treasury Yields Fall

 The widely monitored 10-year Treasury Note Yield declined moderately in November after rising in the previous month. It closed the month at a yield near 4.177% versus October’s closing level near 4.285%, a decline of just over 10 basis points month-over-month.

The slight dip in rates is good news for sidelined prospective mortgage borrowers — and great news for long-term investors in U.S. equities.

Cooler Jobs Market

 November kicked off with the monthly labor market data on the first of the month. The October non-farm payroll data, released in November, showed only 12,000 jobs were created, and the job totals for August and September were revised downward by a combined 112,000. This was not encouraging for the labor market, but it may be viewed as good news for those anticipating interest rate cuts.

 Although the reported job creation figure was significantly lower than expectations, it seems that the actual expectations were much more subdued than the numbers would imply. The low number of jobs created for the month, the weakest since 2020, was heavily anticipated due to the impact of Hurricanes Helene and Milton, which had a considerable effect on the labor market.

 Despite the disappointing data, major U.S. equity indexes performed well on the day of the report’s release, with the Nasdaq, Dow, and S&P 500 all showing gains on the daily trading session. November jobs data will be released on December 8th.

Inflation Rather Mixed in November

 According to metrics released at the end of November, inflation remained mostly unchanged in October.

 Consumer Price Index (CPI): Data showed a monthly increase of 0.2% for October, which matched consensus expectations. This resulted in a year-over-year inflation rate of 2.6%, slightly higher than the previous month’s reading of 2.4%. While the numbers align with expectations, they indicate a persistent inflationary environment.

 Core CPI, which excludes food and energy prices, also rose as expected, increasing by 0.3% for the month and maintaining an annual rate of 3.3%.

 A significant factor contributing to the monthly rise in inflation was shelter costs (again!), which accounted for more than half of the increase. In October, shelter prices rose by 0.4% from the previous month and experienced an annual increase of 4.9%. Despite an overall stabilizing inflation environment, shelter prices remain high.

 Overall, the CPI data can be interpreted as aligning with expectations; however, it also demonstrates some stubbornness, as it showed a rise from 2.4% in September to 2.6% in October.

 Major U.S. stock indexes experienced slight gains in the morning following the data release amid reinforced expectations for a 25-basis-point decrease at the December meeting. On the day of the data release, the likelihood of such a rate cut rose to approximately 82%.

 Producer Price Index (PPI): The day after the Consumer Price Index (PPI) was released, wholesale prices showed a rise of 0.2% in October, matching Dow Jones estimates. Similar to the Consumer Price Index, this wholesale inflation data came in as expected; however, it still marked an increase from the previous month’s reading.

 November Inflation Verdict: Inflation is in line with expectations, but concerns about rising prices persist for many. Shelter costs continue to be stubborn. The general consensus is that the most recent inflation readings are somewhat supportive of a rate cut in December. 

 Consumer Health

 Consumer confidence surged in November, fueled by a swift and decisive election outcome and indicating expectations of easier times ahead for consumers. The index rose to 111.7, its highest level since July 2023 and a 16-month high.

 Retail sales beat estimates in October (November data release), while September retail sales data was revised sharply higher. The consumer has remained remarkably resilient throughout the last several years, and it appears that sentiment is growing. 

 Early Black Friday data shows a 3.4% annual rise in brick-and-mortar and online spending. This is a trend we have gotten used to in recent years, and we will see what Cyber Monday data looks like once it becomes available. 

 We, the consumer, drive the economy at the end of the day! It is easy to lose sight of this fact with so many headlines and market noise. The consumer has been unbelievably resilient for a prolonged period.

 Relaxed Markets

 Short-term market volatility subsided impressively in November, with the CBOE S&P 500 Volatility Index falling to levels not seen since July of this year.

 When S&P 500 volatility decreases, it indicates a reduction of investor fear in the marketplace, leading to a decline in the price of S&P 500 put options. Many portfolio managers use these put options to hedge against market risk. And throughout November, the demand for them was weak, suggesting increased market confidence.

 Some investors also monitor the CNN Fear and Greed Index to assess overall investor sentiment. While short-term market sentiment isn’t a primary concern for most long-term investors, it can be beneficial for those who utilize dollar-cost averaging strategies.

 Looking Ahead

 As we approach the end of the fiscal year, remember to consult with your tax advisor should you need to make any year-end moves in your portfolio to ensure optimal tax treatment. Long-term investing continues to be the ticket.

 As always, if I can be of service in any way, please email or call me. I am always here as a resource for you. 

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Financial Market Update – Week of 11/25

Presented by Marc Aarons @ Money Managers Inc.

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Financial Market Update – Week of 11/18/2024

Presented by Marc Aarons

Major U.S. stock indexes digested monthly inflation data last week, and market participants reacted to comments made by Fed Chair Powell. There was plenty of market-moving action last week, so let’s get to it with a quick update!

Tallying last week, the S&P 500 declined by 2.08%, the Nasdaq 100 fell by 3.42%, and the Dow Jones Industrial Average decreased by 2.60%.

 Major U.S. Equity Indexes

 It has been quite the post-election rally, and equity markets took a breather last week. After the S&P 500’s biggest five-day rally in a year, major U.S. stock indexes sold off ahead of key monthly inflation data, with rising Treasury yields and a rising U.S. dollar as catalysts.

 Federal Reserve Chair Jerome Powell’s comments about the future of interest rate cuts added to last week’s sentiment — more on that in a minute.

 Mostly In-Line Inflation Data

 According to the most recent metrics released last week, inflation remained mostly unchanged in October but was slightly warmer than the previous month’s reading.

 Consumer Price Index data showed a monthly increase of 0.2% in October, matching consensus expectations. This equaled a 2.6% year-over-year inflation rate, higher than the previous month’s 2.4% reading — so in line, but warm.

 Core CPI, which excludes food and energy, also rose in line with expectations, tacking on 0.3% for the month and running at a 3.3% annual pace.

 Once again, shelter costs were the primary factor contributing to the monthly rise in inflation, accounting for more than half of the increase. In October, shelter prices rose by 0.4% monthly and saw an annual increase of 4.9%. Despite an otherwise stabilizing inflationary environment, shelter pricing remains high.

 Overall, the CPI data could be interpreted as in line with expectations, but with some overall stubbornness, as the data showed an overall rise from 2.4% in September to 2.6% in October.

 CPI Market Reaction

 Major U.S. stock indexes rose slightly on the morning of the data release, as the report suggested firming up expectations for a 25 basis point rate cut at the December meeting. The odds of such a rate cut moved higher on the data release day to around 82%.

 But the mood of the markets would shift the next day, with Powell dampening expectations of a rate-cutting Fed. 

 Producer Price Index (PPI)

 Producer pricing (wholesale pricing) showed a rise of 0.2% in September, matching Dow Jones estimates. Similar to CPI, this wholesale inflationary data came in at expectations, but it was still a rise from the previous month’s reading. 

 Verdict: Inflation is at expectations, but pockets of warmth are on the minds of many. Later in the day on Thursday last week, major U.S. equity indexes would trade lower —  not as a direct response to PPI, but more due to Fed Chair Powell’s comments below.

 FedWatch: Powell Commentary

 With market reaction to CPI and PPI in progress, Powell tempered rate-cut hopes during a meeting at a speaking engagement titled “Global Perspectives” hosted by the Federal Reserve Bank of Dallas later in the day Thursday.

 Powell’s comments threw some cold water on risk assets and translated to a fading rally across major US stock indexes.

Comments included that the Fed doesn’t need to be “in a hurry” to lower rates.

 While Powell mentioned the economy is still strong, his comments were deemed as hawkish by the market at large, and rate-cut hopes diminished rather significantly.

 At the close of last week’s trading, futures traders showed a 61.9% probability of a 25-basis-point cut at the December Fed meeting, according to the CME FedWatch tool.

 Gathering consensus elsewhere, opinions are divided, and we will have to see what the Fed does — or says next. We are well aware that the Fed is “data-dependent,” and with inflation persisting and uncertainty surrounding the labor market, we need more data to get a read.

 Government Bond Yields Rise

 As major stock indexes fell last week on hawkish Fed commentary and open-to-interpretation inflation data, government bond yields rose.

 Ten-year note yields gained around 12 and a half basis points to end the week near 4.429%, the highest weekly close since June.

 Two-year note yields also moved higher, although not as much as the 10-year yield, gaining around 5 basis points, closing the week near 3.584%.

 Perhaps recent pricing behavior in government bonds over the last couple of months was predicated upon the Fed getting more hawkish like we saw last week. 

 Gold Loses Luster

 Gold bulls have been hibernating since the election after the shiny yellow metal touched all-time highs in the spot market pre-election near $2,790 per troy ounce. Spot gold closed near $2,563 per troy ounce last week, still higher by a handsome percentage for the year so far.

 Reduced political uncertainty surrounding the election outcome and flows into equities could have given gold bulls some room for pause in the short term.

 The Takeaway

 We just had a monster post-election rally featuring the S&P 500’s best five-day stretch in a year. CPI and PPI data are constructive in that the inflation battle has been fruitful and productive, but there is room for interpretation on both sides of the argument in the eyes of the market. 

 The Fed sounded hawkish, and rate cut probabilities dwindling somewhat last week didn’t leave market bulls with much to hang onto temporarily. But we have come far rather quickly. Profit-taking is bound to occur for shorter-term traders. For long-term investors, however, the beat goes on until the next narrative takes form. 

 Let’s also be mindful that the interest rate markets have been telling us something for the last couple of months, as rates have risen in the open market. Even though the recent narrative has been for more rate cuts to come, the move higher in rates has been stubborn. So, an adjustment in market pricing for many assets was bound to occur. Let’s see what we get next.

 As always, if there is anything on your mind regarding the markets and the latest developments, shoot me an email or give me a call! I am always here as a resource for you.

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

The post Financial Market Update – Week of 11/18/2024 appeared first on Money Managers, Inc..

Financial Market Update – Week of 11/11

Presented by Marc Aarons

Last week was rewarding for long-term investors, with election results and a Fed meeting providing the catalysts to boost several major stock indexes to all-time highs. With so much happening, it is the perfect time for a quick update! 

Summarizing last week’s trading, the large-cap S&P 500 gained 4.66%, the Nasdaq 100 increased by 5.41%, and the Dow Jones Industrial Average rose by 4.61%. All three of these indexes made fresh weekly all-time-high closes.

Election Boost: S&P 500 Crosses Above 6,000

As last Tuesday’s election results were finalized, markets had one thing on their mind: higher stock prices.

Wednesday brought us a sharp rally in major stock indexes as government bonds dropped and yields rose. The broadest benchmark of the U.S. economy, the S&P 500 crossed the key psychological level of 6,000 and settled slightly beneath it to close out the week. 

Long-term investors will take it!

Federal Reserve (Fed) Rate Cut

As widely expected, the Fed cut the benchmark rate by 25 basis points at last week’s November meeting — no surprises there.

The move is the follow-up to the central bank’s large 50-basis-point cut in September, which brings the current target lending rate range to 4.50% – 4.75. The rate cut vote was unanimous. The move supports the labor market, with further data needed to gauge the current state of inflation.

Major stock indexes were steady after the rate decision and subsequent Fed commentary, and stocks closed positively on the day as bond yields traded lower after being higher the day before.

Powell Press Conference

Fiscal Policy: As usual, attention turned to Federal Reserve Chair Jerome Powell’s 2:30 PM press conference after the 2:00 p.m. rate decision release last Thursday.

Powell had some memorable responses during the Q&A session, notably some commentary on overall fiscal policy.

“The federal government’s fiscal path, fiscal policy, is on an unsustainable path,” Powell said. 

“The level of our debt relative to the economy is not unsuitable, the path is unsustainable…. And we see that in a very large deficit, you’re at full employment [and] that’s expected to continue, so it’s important that be dealt with,” Powell added. “It is ultimately a threat to the economy.”

“Not Permitted Under Law”: It is widely known that relations between President-Elect Donald Trump and Powell may not be the most amicable, and the question about it came up during last week’s presser.

When asked if he would step down if the President-elect asked him to, Chair Powell’s response was a resounding, and short:  “No.”

Questions surrounding the topic surfaced again later in the conference, with another reporter asking if the president-elect had the authority to fire or demote Powell. 

The Fed chair responded that such an action is “not permitted under law.”

Volatility Fizzles

The most widely watched measurement of stock market volatility, the $VIX, dropped substantially on the heels of the election results and the Fed rate cut.

The $VIX, aka Fear Index, closed under $15.00 last week — trading near the summer 2024 lows, indicating investor fear leaving the marketplace.

After a down week for volatility and the $VIX declining by over 30% last week, are investors too optimistic in the short term? Objectively, much uncertainty was removed from markets last week, with known election outcomes and a known Fed decision.

It will be about the Consumer Price Index (CPI) this week, and we will see how volatility reacts after the best week of 2024 for the S&P 500 and the Dow.

Bitcoin Breaks Out

Last week, patient and long-term Bitcoin investors were rewarded.

After a lengthy consolidation in price for much of 2024, Bitcoin broke out of its trading range to the upside, fueled by election and deregulation hopes.

Bitcoin notched a fresh all-time high on the Coinbase exchange, reaching levels north of $77,000 per bitcoin as of Saturday evening — gaining over 12% for the week.

Bitcoin continues to draw investor attention based on its limited supply.

Consumer Sentiment

With all the talk last week surrounding elections and the Fed, what about the consumer?

Fresh University of Michigan consumer sentiment data shows the consumer once again remaining resilient and cautiously optimistic.

The UoM November consumer sentiment metric rose to a print of 73.0 versus 71.0 expected, much better than estimates.

This Week = CPI

It is that time in the data release cycle, and traders want to know where the nation stands on inflation. 

With the 25-basis-point cut in the books and government bond yields rising on the open market recently overall, eyes will be peeled on this all-important inflation metric being released this Wednesday morning. 

The Takeaway

The start of November is very constructive for long-term investors. With the election out of the way and the market response looking favorable, attention will now shift back to inflation data and the direction of future Fed policy.

This week has the data releases (PPI, CPI) that are needed to shape near-term market direction and consensus after a stellar run in major stock market indexes in October and to start in November. November is historically a good month for stock indexes. 

Bond yields and the U.S. dollar are also in focus right now.  I will be staying on top of the latest developments to keep you informed.

As always, if there is anything on your mind regarding the markets and your strategy, let me know, and we can connect to discuss. 

I am always here as a resource for you!

Please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

The post Financial Market Update – Week of 11/11 appeared first on Money Managers, Inc..

OCTOBER FINANCIAL MARKET UPDATE

I hope this email finds you well! Long-term investors with diversified portfolios had a solid month in September, as the S&P 500 rose for three consecutive weeks. As a bonus, the recent stock index rally was further fueled by a Federal Reserve (Fed) that delivered on a 50-basis-point rate cut.

With the major U.S. equity market indexes continuing their impressive overall upward trajectory since May, now is the perfect time to inform you about key developments over the course of the last month.

Major Stock Indexes

The recent stock market rally continued for another month, but it wasn’t without some fireworks at the beginning of the month over labor market concerns.

Amazingly, the S&P 500 had its worst week of 2024 to start the month. Yet by month’s end, it was another month in the green. It is truly amazing how the volatility has come and gone so quickly this year. 

Overall, for the month of September, the S&P 500 added 2.02%, the Nasdaq 100 tacked on 2.48%, and the Dow Jones Industrial Average was higher by 1.85%.

Fed Rate Cut

In September, the Fed delivered the hugely anticipated rate cut in the form of a 50-basis-point cut to the overnight lending rate, leaving the Fed’s target rate between 4.75 – 5.00%. The rate cut is the first in four years, and the market response was supportive.

 Heading into the Fed rate decision, a rate cut was widely expected, and it was just a matter of whether it would be 25 or 50 basis points. The Fed went in the more aggressive direction.

 Fed Market Reaction & Expectations

 Market reaction to the Fed rate decision the day after the announcement was bullish and was on full display, as the Dow and S&P 500 jumped to record high levels.

 According to the Fed’s Summary of Economic Projections (SEP), 50 basis points of additional cuts are now expected for 2024, a more dovish and accommodating stance than previously thought.

 Fed Recalibration

 Are you looking for a new financial buzzword? Fed “recalibration” is here! This term originated at the Fed press conference following the interest rate decision.

 The message is one of strength surrounding the state of the economy, indicating that the large 50-basis-point rate cut was not executed due to economic weakness, but rather to shore up the labor market .

 Markets interpreted the message in the intended fashion, as asset prices soared the day after the Fed announcement and recalibration message.

 Softer U.S. Inflation Readings

 The overall trend for inflation saw some further cooling in September to the delight of stock market bulls.

 Consumer Price Index (CPI): The most recent CPI data released in September (August data) showed inflation continuing to cool on an annualized basis, coming in right at expectations. The report revealed a 0.2% increase in monthly CPI, resulting in an annual increase of 2.5% — the lowest annual inflation rate since 2021. Markets liked it.

 Prices of goods and services are still elevated; we don’t need government data to let us know that! But we are making great strides toward the Fed’s 2% inflation target. Many analysts expect the overall inflation-cooling trend to continue, but let’s see how the 50-basis-point cut affects it!

 CPI Market Reaction: Markets initially lost some ground upon the CPI data release in September, with the Dow falling 743 points intraday before mounting its largest intraday comeback in almost two years.

 The trading action came as a result of traders and investors trying to figure out if the data would edge the Fed toward a 25- or 50-basis point cut and whether such an action would translate to a soft or hard landing.

 Well, we got the 50 basis points at the Fed meeting, and the current consensus and market reaction is one for a soft landing.

 Producer Price Index (PPI): The day after we got CPI,  producer pricing (i.e., wholesale pricing) was released and showed a rise of 0.2% in August, matching Dow Jones estimates. Major stock indexes came into the day of the release higher from the previous day’s CPI print and continued their upward journey that day.

 Personal Consumption Expenditures (PCE): The freshest piece of inflation data came towards the end of September in the form of the Fed’s preferred inflation gauge, PCE.

 Data showed pricing coming in below expectations, with prices rising 2.2% annually and only 0.1% for the month versus expectations for 0.2%.

 2.2%, psychologically, is very close to the Fed’s goal of 2%, and the encouraging data print on the inflation front paves the way toward a rate-cut-friendly Fed in the future.

 Mixed Labor Market Data 

 September’s monthly jobs report showed another decline in job creation, with 142,000 jobs created in August vs. 161,000 forecasted. Unemployment declined on a monthly basis, however, to 3.9% versus 3.7% forecasted.

 The data comes after recent revisions that triggered concern over the labor market. Over the last couple of months, we’ve seen downward revisions in previously printed job creation data, and they factored heavily into the Fed’s 50-basis-point rate cut decision to shore up the labor market.

 Treasury Yields & Normalization

 The 2-year Treasury yield and the 10-year Treasury yield moved lower overall throughout the month, ending September near 3.803% on 10s and 3.645% on 2s.

 Perhaps more important is the relationship between the 10-year and 2-year yields. We saw the 2/10 yield curve “uninvert” or normalize in September for the first time in 793 days, which represented the longest yield inversion in history. Yield inversion occurs when the 2-year Treasury yield is larger than the 10-year yield. 

 Well, we are back to normal now. The 2/10 yield curve normalization has various interpretations, one of which is that it’s a historical indicator that portends recession. Yet, other interpretations exist based on where we are.

 Mixed Consumer Data

 September retail sales data showed an increase of 0.1% in August amid varying expectations. After reaching a six-month high in August, consumer confidence dropped in September to 98.7 versus expectations of 103.9.

 So, it was a mixed bag for the consumer last month. We’ll see how the Fed’s rate cut affects the consumer in upcoming data releases. 

 The Takeaway

 September featured a further continuation of the rally in anticipation of a Fed rate cut, and the market got what it wanted in the form of the 50-basis-point variety. Inflation data showed further signs of encouragement, although the labor market could use some help. We know the Fed has this in mind. 

 The yield curve “uninversion” or normalization hasn’t commanded too much attention in the media, but we know it has occurred. Election Day themes are a topic of discussion and will continue to be until Election Day and beyond. 

 Current expectations for 50 basis points more in cuts to come for the rest of 2024. How will the normalization of the yield curve intertwine with any potential further rate cuts? Time will tell.

 As always, we’re dedicated to prioritizing long-term goals and strategy while keeping you apprised of current market developments. If you have questions or concerns, feel free to reach out anytime. I am always here as a resource for you.

 Wishing you a fantastic October,

As always, please don’t hesitate to reach out with any questions or concerns.

Marc Aarons may be reached at 714-887-8000 or Email Marc

Money Managers inc. Website

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.

The post OCTOBER FINANCIAL MARKET UPDATE appeared first on Money Managers, Inc..

In this Q4 recap: U.S. economy confronts a new COVID-19 variant amid continuing inflation and supply chain bottlenecks. Europe institutes new social restrictions in response to a surge in Delta and Omicron variant infections. Investors turn cautious as uncertainties increase.

THE QUARTER IN BRIEF

The stock market kicked off the fourth quarter with a powerful rally in October and added to those gains into November until investors were blindsided by news of the emergence of a new COVID-19 variant, Omicron, and testimony by Fed Chair Jerome Powell that escalating inflation and an improving labor market warranted consideration of an acceleration of its bond purchase tapering plans.

Markets, as a rule, do not like surprises and uncertainty and the combination of a new variant and a suddenly more hawkish Fed sent stocks into a skid that largely erased the November’s accumulated gains. Market reaction to the Omicron news was exacerbated by when the news hit–on Black Friday, a day that typically provides less liquidity since many investors and traders are on holiday.

Investors soon learned the contours of what a more hawkish monetary policy would look like. In its mid-December meeting, the Federal Open Market Committee (FOMC) announced plans to speed up its bond purchase tapering schedule and signaled that, once tapering is concluded in March 2022, up to three rate hikes may follow.

Markets settled down into the final weeks of the quarter as early indications suggested that Omicron’s health impact was less severe than the Delta variant. Relieved that its economic consequences may be less than initially feared, reinvigorated investors jumped back into the market, pushing stocks higher into the end of December and capping a strong year of performance.

Corporate profits for the third quarter were solid. Eighty-two percent of the companies comprising the Standard & Poor’s 500 Index reported earnings above Wall Street analysts’ expectations, posting an average earnings growth rate of 39.8% in the third quarter. This earnings momentum is anticipated for the fourth quarter, with an earnings growth forecast of 20.9%, which, if realized, will mark a historical high watermark in corporate profits.¹

THE U.S. ECONOMY 

After a Delta variant-induced slowdown in the third quarter, signs are pointing to a strong economic rebound in the fourth quarter and solid growth into 2022. Though the official economic growth rate for the fourth quarter won’t be reported until January’s Gross Domestic Product (GDP) report, according to the Federal Reserve Bank of Atlanta, which tracks economic data in real time, their model is indicating a 7.2% annualized real rate of Q4 GDP growth.²

This economic rebound overcame several headwinds, including accelerating inflation, supply chain bottlenecks, a labor shortage, and a pending pivot toward monetary normalization.

The labor market evidenced considerable recovery as initial jobless claims fell steadily, while the unemployment rate shrank to 4.2% in November, even as some 600,000 Americans entered the labor market and the labor participation rate rose to pre-pandemic levels.³

The nation’s manufacturing sector gathered momentum in the fourth quarter. The Institute for Supply Management (ISM) Manufacturing Index rose in November for the eighteenth straight month, with the trend pointing toward a faster acceleration in that growth.⁴

Looking ahead, one survey of economists conducted by the Federal Reserve Bank of Philadelphia shows a median forecast of 3.9% in GDP growth in 2022, with stronger growth in the first half of the year and a moderating expansion in the final two quarters.⁵

Especially noteworthy is the American consumer, the primary driver of economic growth. Americans have stockpiled $2.3 trillion of excess savings (i.e., savings above pre-pandemic levels), providing a strong underpinning to fuel future economic activity.⁶

While the economic outlook appears positive, headwinds exist.

The economic impact of Omicron is difficult to estimate. For now, it appears unlikely to lead to widespread lockdowns, but it may pose the potential to prune economic growth at the margins.

Perhaps the most concerning potential financial risk is inflation, which has persisted at an elevated rate for longer than the Fed expected. November’s Consumer Price Index (CPI) provided little comfort, as prices jumped at a rate not seen in nearly forty years, rising 6.8% year-over-year. It was the sixth consecutive month that inflation exceeded 5%.⁷

Shaky consumer confidence is another possible risk. Though consumers may be flush with excess savings, spending requires consumers to be confident about their personal situations and the economy. In the University of Michigan’s November consumer sentiment survey, Americans expressed less optimism than at any time since the credit crisis years, largely due to rising inflation and perceived government inaction to address it.⁸

While additional risks may present further challenges, the overall expectation, nevertheless, is for continued economic expansion in the near- to intermediate-term.

GLOBAL ECONOMIC HEALTH

The economic outlook in European Union (EU) countries remains encouraging despite the rise in Delta and Omicron variant infections and instances of some countries, e.g., Austria and Germany, instituting fresh economic restrictions. Maintaining this economic growth momentum has been primarily a result of continued progress in the region’s vaccination efforts. As a consequence, the EU economy is projected to grow by 5.0% for the full year 2021 and by 4.3% in 2022. Domestic demand and an improving labor market are expected to drive this economic improvement, but inflation, ongoing supply chain bottlenecks, and the Omicron variant are the main risk factors that could upend this otherwise strong forecast.⁹

The Bank of England is less sanguine about the prospects for the United Kingdom’s economic growth going forward. While GDP growth in 2021 is expected to be a very healthy 7.0%, the estimated growth rate for the fourth quarter was shaved due to supply chain disruptions. For 2022, the U.K.’s central bank is forecasting a 5.0% expansion in GDP. Similar to other countries, continuing supply chain problems, inflation, and the spread of COVID-19 represent risks to the U.K. economy in the months ahead.¹⁰

Economic growth in China slowed considerably in the latter part of 2021. In fact, GDP growth in the third quarter (+4.9%) was the slowest growth rate in a year, and materially lower than the second quarter growth rate of 7.9%. Economic growth is expected to further decelerate in the fourth quarter and remain weak into the first half of 2022. There are a variety of factors that are weighing on China’s economy, including its zero-COVID policy, power shortages, massive debts held by property developers, and the drag of government regulation on private sector businesses.¹¹

The Bank of Japan shaved its forecast for economic growth in 2021 from 3.8% to 3.4%, but raised its estimate for GDP expansion in 2022 to 2.9%, up from 2.7%, citing the effects of COVID-19 infections and the expectation that the Japanese economy would rebound as the COVID-19 overhang wanes.¹²

The MSCI-EAFE Index, which tracks developed overseas markets, rose 2.40% in Q4, while emerging markets, as measured by the MSCI-EM (Emerging Markets) Index, fell 1.68%.¹³

T I P   O F   T H E   Q U A R T E R
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LOOKING BACK, LOOKING FORWARD

Investors enjoyed robust stock market returns in 2021. It was a performance that had less to do with P/E ratio (Price-to-Earnings) expansion – the market P/E actually came off its high – and more a result of strong earnings growth.

One overlooked feature of the stock market’s 2021 performance was the successive waves of rotational corrections. From the view of major indices, stocks enjoyed a steady rise throughout the year without a correction (i.e., a decline of 10%-20%), suggesting a generally stable, even placid, stock market.

However, beneath this smooth ascent were periods of volatility for specific industry groups. For example, as of November 26, while the year-to-date return on the S&P 500 was 22%, 92% of its constituent stocks experienced at least a 10% decline from their YTD highs, with an average drawdown of 18%. Similarly, the technology-heavy NASDAQ Composite, which was up by 20%, saw 89% of stocks with a drawdown of at least 10% and an average retreat from YTD highs of 40%.¹⁴

In other words, while the major market indices did not experience a correction, most stocks comprising these indices suffered corrections at some time during the year.

It is unrealistic to expect a repeat of the 2021’s outsized gains, but the consensus of Wall Street analysts is one of modest price gains in 2022 amid continued economic growth and low, though rising, interest rates.

While the market may be affected by multiple “known unknowns,” e.g., geopolitical flare-ups, trade frictions, or inflation, there are several key ones worth highlighting.

The Federal Reserve began to pivot toward monetary normalization, announcing in December an acceleration of bond tapering and the possibility of up to three interest rate hikes. Markets expected this, so this may already be priced in. However, if the Fed finds itself behind the inflation curve and needs to increase the number of rate hikes or accelerate their pace, it may unsettle investors.

Corporate earnings growth is anticipated to moderate in 2022. This is to be expected considering the rate of economic expansion will likely slow and its comparative period, 2021, established such a high bar.

That said, 4Q 2021 earnings (reported in 1Q 2022) is forecast to grow by 20.9%, which, if that materializes, means 2021 full-year earnings growth will be 45.0%. For 2022 Wall Street analysts are projecting an 8.8% jump in corporate profits. This is a substantial come-down, but it represents healthy growth from a high watermark. Should companies exceed these expectations, it may help support higher valuations.¹⁵

Another important market influence may be a slowdown in China’s economy. A deceleration in the growth of the world’s second largest economy may translate into lower consumption of imported consumer goods or production of manufactured goods, representing a potential risk to the global economy.

Possible rate hikes, higher inflation, and moderating economic growth may sound like a recipe for a tepid stock market, but history tells us that stocks are more likely to rise in a rising interest rate environment and during periods of moderate economic deceleration. While past performance is not a guarantee of future returns, it suggests that markets may advance under less-than-optimal circumstances.¹⁶

Sources: Wall Street Journal, December 31, 2021, Treasury.gov (Bond Yield)

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

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MMI disclosure

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The FTSE 100 Index is a share index of the 100 most highly capitalized companies listed on the London Stock Exchange. BSE Sensex or Bombay Stock Exchange Sensitivity Index is a value-weighted index composed of 30 stocks that started January 1, 1986. Nikkei 225 (Ticker: ^N225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The All Ordinaries (XAO) is considered a total market barometer for the Australian stock market and contains the 500 largest ASX-listed companies by way of market capitalization. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The MSCI Emerging Markets Index is a float-adjusted market capitalization index consisting of indices in more than 25 emerging economies. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The CBOE Volatility Index^® is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The S&P SmallCap 600® measures the small-cap segment of the U.S. equity market. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1. <sup>factset.com, December 2, 2021
   2. Federal Reserve Bank of Atlanta, January 4, 2022
   3. wsj.com, December 3, 2021
   4. Institute for Supply Management, November 2021
   5. philadelphiafed.org, November 15, 2021
   6. bloomberg.com, October 17, 2021
   7. wsj.com, December 10, 2021
   8. The Index of Consumer Sentiment, December 2021</sup>
2. <sup>ec.europa.eu, November 11, 2021
   10. Bank of England Monetary Policy Report, November 2021
   11. Bank of Japan, October 2021
   12. Focus Economics, December 2021</sup>
3. <sup>msci.com, December 2021
   14. 2022 Schwab Market Outlook, December 6, 2021
   15. factset.com, December 2, 2021
   16. fidelity.com, October 27, 2021</sup>

The post Quarterly Economic Update A review of Q4 2021, Presented by Marc Aarons appeared first on Money Managers, Inc..

What to know as markets look forward.

 Provided by: Marc Aarons

 Are you having a tough time keeping track of inflation’s mixed signals? You’re not alone.

Consumer prices in July climbed at their fastest rate since August 2008. Worse, producer prices, which can be an indicator of future price changes at the consumer level, rose at the highest rate since tracking began.¹

However, in recent weeks, the stock market has shrugged off the inflation news, believing that the worst is over and rising prices will moderate in the future.

It’s important to remember that the stock market is a discounting mechanism, which means it’s always looking forward. Put another way, the stock market’s price today represents all available information about current and future events. How far forward is the stock market looking? Most would agree it’s “discounting” activity six to nine months into the future.²

Does that mean inflation will be lower in six to nine months? That’s what the stock market is suggesting. But the stock market also has a less-than-perfect record as a discounting mechanism, largely because the future is somewhat unknowable.²

Inflation is just one factor to consider when adjusting a portfolio. But if you’re unsure, thanks to the mixed messaging I’ve seen lately, please reach out. We’d welcome the chance to hear your perspective.

Marc Aarons may be reached at (714) 887-8000 or marc@ocmoneymanagers.com

 ^{MMI Disclosure This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The S&P 500 Composite Index is an unmanaged group of securities considered to be representative of the stock market in general. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index.}

^{This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.}

^Citations

1. ^{CNBC, August 11, 2021}
2. ^{Investopedia.com, April 28, 2021}

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