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Hope all is well with you and your family. The NASDAQ managed to post a small gain, the broader S&P 500 fell for the fourth week in a row―the longest such streak in more than a year. The bulk of the indexes’ weekly losses came on Wednesday, when the NASDAQ dropped 3.0% and the S&P 500 fell 2.4%. With the latest weekly decline, the S&P 500 was down 8% from its early September record high, the NASDAQ was down almost 10% from its peak, and the Dow was 7% below a recent high. The Dow’s record was set in February of this year, when it was 8% above Friday’s closing level. I broke down this week’s market news using quotes from Lewis Carroll’s classic Alice in Wonderland.
"A slow sort of country! …Now, here, you see, it takes all the running you can do, to keep in the same place.” -The Red Queen
The economic recovery seems to be running in place. U.S. Federal Reserve Chair Jerome Powell told Congress that the U.S. economy has a long way to go before it can fully recover from the coronavirus pandemic, and he said it needs further support. He noted that employment and overall economic activity remain well below pre-pandemic levels and said that the path ahead “continues to be highly uncertain.” 
“Oh, you can’t help that…we’re all mad here. I’m mad. You’re mad.” -The Cheshire Cat
Markets will see the week if Congress can remain focused on getting relief to Americans in need or if they get distracted and descend into partisan bickering over the nomination of Amy Coney Barrett to the Supreme Court. Hopes for another congressional relief package were renewed on Thursday as U.S. House Speaker Nancy Pelosi changed course and resumed efforts to write a new measure that could serve as the basis for negotiations with the White House. 
“Contrariwise,…if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.” -Tweedledee
This week markets will be watching Tuesday evening’s Presidential debate and Friday’s jobs report. Never has there been so much build up to a debate and never have we expected so little in the way of coherent logical thought from either of the debate participants. The winner will likely be judged on who makes the fewest mistakes as opposed to who articulates the best ideas. While the debate may move markets the monthly labor market update likely will. It will be the final jobs report before the U.S. election. The new release will show whether September’s recovery of nearly 1.4 million new jobs extended into October. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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Hope all is well with you and your family. The major U.S. stock indexes fell for the third week in a row, retreating again from the record highs that the S&P 500 and the NASDAQ achieved early this month. The latest week’s decline was much smaller than the previous week’s pullback. The big technology stocks that had led the broader market for most of this year extended their more recent run of underperformance, and the tech-oriented NASDAQ trailed the Dow for the third week in a row. As of Friday, the NASDAQ was down more than 10% from the record high it reached on September 2. The drop has me looking at signs.
Markets Signals Improving Economic Health Small company stocks usually lead coming out of a recession. U.S. small-cap stocks had a breakout week, outperforming large caps by a wide margin. The Russell 2000 Index, a small-cap benchmark, gained nearly 3%. On a year-to-date basis, however, small caps continue to lag far behind large caps. The outperformance this week could be indicative of markets starting to believe that the economy has turned and we are exiting the recession. Near-Zero Rate Outlook The U.S. Federal Reserve does not have enough visibility on the economy or the virus to raise rates any time soon. They kept interest rates unchanged and signaled that it expects to keep its benchmark rate near zero for at least three more years. All 17 Fed officials who made projections said they expect to keep rates near zero at least through next year, and 13 projected rates would stay there through 2023. Supreme Court Vacancy This election was already shaping up to be one of the most bitterly contested in modern history, and filling the vacancy on the Court could lead to further division and only increases the uncertainty about the results. Volatility has been rising lately as the presidential election draws closer. That isn’t unusual: Stocks typically sells off an average 2% from September to November in presidential election years. What’s different now is the reactions to political events cause larger short-term movements in the markets than years past. What Should You Be Doing With Your Money With long term money that is invested in the stock market, it is best to hold and do nothing during periods of volatility. If you have money on the sidelines then the steep sell off in the stocks with the biggest gains like Apple and Microsoft (the two largest companies in terms of valuation) has created a great buying opportunity. These company’s earnings are not really linked to the election. With the Federal Reserve promising years of low rates stocks like Apple and Microsoft which offer growth potential and dividends which are higher than money market rates will continue to see money flow in from investors as bonds and banks offer little to no return. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ Hope all is well with you and your family.
Here is what you need to know from this week using football terminology since the NFL season started this week. Tech Stocks Drop the Ball The major U.S. stock indexes fell for the second week in a row, retreating again from the record highs that the S&P 500 and the NASDAQ achieved on September 2. The market was turbulent in a holiday-shortened week, with the NASDAQ posting a 4% decline on Tuesday followed by a nearly 3% gain on Wednesday. The NASDAQ on Tuesday fell into a correction, as the index was down 10% from the record high that it had set just six days earlier. Several of the market’s biggest technology stocks weighed on the NASDAQ, posting weekly declines of more than 5%. Inflation Rising Up Prices are rising. Inflation remains below the U.S. Federal Reserve’s 2.0% target, but it’s rising even as unemployment remains high. The Department of Labor on Friday reported that consumer prices rose 0.4% in August compared with July, or 1.3% from a year earlier. In contrast, the year-over-year rise was just 0.2% as recently as May. Congress Keeps Relief Package On The Sideline Prospects for approval of another congressional stimulus package before the November election appeared to dim, as a GOP-authored coronavirus relief package failed to secure enough Senate votes to move forward. Democrats said the measure doesn’t go far enough, and the sides remained at odds over issues such as state aid and another round of direct payments to Americans. Fed Meeting Next Week To Determine The Game Plan While no major policy moves are expected when the U.S. Federal Reserve Board concludes a two-day policy meeting on Wednesday, Chairman Jerome Powell could offer some further details on a recent shift in how the Fed views inflation. Powell said last month that the Fed won’t worry as much as it previously had about the prospect of low interest rates triggering rising prices. I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment. https://booknow.appointment-plus.com/b8hh5y90/ |
Stephen Caruso
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STEPHEN CARUSO
President & Founder
Laurel Wealth Solutions
President & Founder
Laurel Wealth Solutions
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Licensed Insurance Professional.
Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11
Stephen Caruso is an Investment Advisor Representative offering investment advisory services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe"). Belpointe is an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC. Important disclosures related to Belpointe are available at http://www.belpointe.com. Additional information pertaining to Belpointe’s registration status, its business operations, services and fees and its current written disclosure statement is available on the SEC’s Investment Adviser public website at https://www.adviserinfo.sec.gov/.
AR-4241 | 18296-2018/12/11