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Weekly Market Commentary February 27, 2023

Weekly Market Commentary

February 27, 2023

 

The Markets

 

Is it good news or bad news?

 

The answer depends on your perspective. Last week, we learned that:

 

Consumer sentiment is at its highest level in more than a year. Consumers are feeling better about current economic conditions and the future. That said, the University of Michigan Index of Consumer Sentiment remains 20 points below its long-term average. Consumer expectations for inflation over the next year increased from 3.9 percent to 4.1 percent and, over the longer term, consumers anticipate inflation will average about 2.9 percent.

 

Americans spent more money in January. Consumer spending is the primary driver of economic growth in the United States. In January, “consumers’ spending increased and after-tax incomes rose...Taken together, these indicators are the latest evidence that the U.S. economy started the year on a strong note — bucking signs of a slowdown at the end of last year,” reported Courtenay Brown of Axios.

 

Business conditions improved in the U.S., overall. In the United States, business conditions improved as demand for services increased, reported Lucia Mutikani of Reuters. In February, the S&P Global Flash U.S. Composite PMI Output Index came in at 50.2. Readings above 50 indicate the economy is expanding. For the last seven months, the reading has been below 50.

 

“The long tails of fiscal stimulus, for example, have propped up the economy for far longer than anyone expected. Excess consumer savings and an ebullient labor market fueled demand for travel, restaurant dining, and other services, where spending still has room to grow. And years of low interest rates have transformed the debt dynamics for the overwhelming majority of U.S. households, leaving them largely shielded, through fixed-rate mortgages, from the impacts of the Federal Reserve’s primary tightening tool,” reported Megan Cassella of Barron’s.

 

Business conditions improved in many parts of the world. February’s Flash PMI readings were above 50 for many regions, including the Eurozone (52.3), the United Kingdom (53.0), Japan (50.7), and China (50.1).

 

Greater optimism, improving business conditions, higher incomes, and more spending appear to be positive developments. The kicker is that they helped push inflation in the wrong direction. One of the Federal Reserve’s favored inflation indices showed inflation moving higher from December to January. That’s not what the Fed wanted to see. It has been working aggressively to tame inflation and recent economic data suggests it has more to work to do.

 

Major U.S. stock indices finished the week lower, according to Nicholas Jasinski of Barron’s. Treasury yields rose across many maturities.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. 

Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

FUN WITH MONEY IDIOMS. We know that money doesn’t grow on trees, but that doesn’t stop us from saying it. We also say that people bring home the bacon, time is money, and money talks. These all are idioms – phrases that don’t mean what they say. For instance, money doesn’t really talk. Every country has its own money slang. See what you know about global money idioms by taking this quiz.

 

1.   In Germany, they may say that someone ‘lives like a maggot in bacon.’ It means:

a.   They borrow from others and do not repay them

b.   They live a decadent lifestyle

c.    They pay too much for everything

d.   They live in a house full of flies

 

2.   In Poland, this saying describes a person who doesn’t like to spend money:

a.   To slide in on a shrimp sandwich

b.   To be eating cables

c.    To be as phony as a $3 bill

d.   To have a snake in your pocket

 

3.   If you live in Spain and ‘have more wool than a lamb,’ then you:

a.   Are very rich

b.   Talk about money too much

c.    Shop at expensive stores

d.   Prefer natural fabrics

 

4.   In Holland, if you ‘buy something for an apple and an egg,’ what have you done?

a.   Bartered for goods

b.   Paid too much

c.    Found a real bargain

d.   Are a vegetarian

 

Whenever you need help getting your financial ducks in a row, get in touch. We’re happy to share our two cents!

 

Weekly Focus – Think About It

A day without laughter is a day wasted.”

—Charlie Chaplin, Comic actor

 

Answers: 1) b; 2) d; 3) a; 4) c

Weekly Market Commentary March 6, 2023
Weekly Market Commentary February 21, 2023

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