The Independent Market Observer

Will Job Growth Stay Strong?

August 31, 2022

I have been saying for some time now that, as long as job growth remains strong, a recession simply isn’t likely. So far, that has played out, but the same question comes up every month: will job growth remain strong? We’ll find out on Friday whether that is still the case.

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Why Is the Market Going Down?

August 30, 2022

The big question on everyone’s mind is, why is the market going down? The answer, in short, is interest rates. Interest rates are up. When rates go up, stocks tend to go down. And this takes us to the next question: why are interest rates up—and will they continue to rise?

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Economic Release Snapshot: Spending Growth Declines in July

August 29, 2022

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

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Is Housing Headed for a Significant Correction?

August 25, 2022

After a massive surge in homebuying throughout the pandemic, cracks are starting to show. Demand has begun to wane, while supply is increasing at the fastest pace in decades. So, will we see a moderation in prices if supply continues to outpace demand in the latter half of the year and into 2023?

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Long Live Asset Allocation?

August 24, 2022

What a whirlwind year it has been in the financial markets. Not since 1994 have investors seen simultaneous declines in both equities and fixed income, prompting many to question the viability of holding both in a portfolio context. Negative performance across asset classes during the first half of 2022 challenged even the most ardent believers of diversification and modern portfolio theory, leaving many of us to wonder whether we are entering a new paradigm for asset allocation. Should investors abandon the view that stocks and bonds can provide complementary exposures in a portfolio? Disclaimer: I don’t think so.

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Economic Release Snapshot: Housing Sector Continues to Slow

August 22, 2022

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

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Monthly Market Risk Update: August 2022

August 17, 2022

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

Equity markets rebounded in July after experiencing widespread losses in the second quarter. The S&P 500 gained 9.22 percent during the month, while the Dow Jones Industrial Average increased 6.82 percent. The Nasdaq Composite saw the largest rise, as the technology-heavy index was up 12.39 percent in July. These strong results were encouraging, but they were not enough to offset declines from earlier in the year.

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Economic Release Snapshot: Inflation Cools in July

August 15, 2022

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

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Inflation Continues to Cool: Is This a Change in Trend?

August 11, 2022

Earlier this week, we saw the Consumer Price Index (CPI) report was down from last month and generally well below expectations—in this case, a good thing. Today, we got the Producer Price Index (PPI) report, which was also down from last month and less than expected. Inflation appears to have peaked and is potentially on track to decline.

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Economic Risk Factor Update: August 2022

August 10, 2022

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

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Yield Curve Message? No Recession Yet

August 9, 2022

As we negotiate the recession or no recession debate, one of the key data points is what’s called a yield curve inversion, which is a greatly intimidating technical term for something that is really pretty simple: the interest rate on a long-term bond minus the interest rate on a short-term bond. But economists can’t really be intimidating if we just say that!

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Economic Release Snapshot: Hiring Surges in July

August 8, 2022

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

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Very Strong Jobs Report Is Very Good News

August 5, 2022

Yesterday, I spent a lot of time talking about how the jobs report was likely to meet expectations, but the underlying assumption was that the risks were to the downside. I talked about how, if job growth fell short, it was likely due to a lack of workers rather than a lack of jobs. I did mention the report could surprise to the upside, but didn’t give it a lot of attention. So when I looked at the actual data this morning, I can summarize my reaction with one word: Wow!

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Make It or Break It? A Jobs Report Preview

August 4, 2022

With all the concerns around a recession, one of the key data points that says the economy is still growing has been the jobs numbers. With companies adding hundreds of thousands of jobs per month, with quit rates still very high, with millions more jobs available than we have ever seen before, the jobs market still looks like boom times—not a recession. The question, of course, is how long can that good news continue? This Friday’s jobs report will give us the most current answer.

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Looking Back at the Markets in July and Ahead to August 2022

August 3, 2022

July was a surprisingly good month for financial markets, with the greatest monthly gains since 2020. The S&P 500 was up 9.22 percent during the month, the Dow Jones Industrial Average was up 6.82 percent, and the Nasdaq Composite was up 12.39 percent. While all three indices are still down for the year, last month reversed a significant share of the losses. Internationally, developed markets rebounded, although emerging markets didn’t do as well as expected.

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Market Thoughts for August 2022 [Video]

August 2, 2022

After a terrible start to 2022, markets rebounded in July. U.S. and developed international markets were up by 5 percent or more, with only emerging markets trailing. The primary driver here was the Fed. It has raised interest rates close to a neutral level, and markets are anticipating the worst of the tightening cycle has passed. But with the U.S. economy contracting for the second quarter in a row, can the rebound continue? Stay tuned to my latest Market Thoughts video to find out.

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Economic Release Snapshot: U.S. Economy Contracts in Q2

August 1, 2022

Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead. 

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Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

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