September 2022 Market Update

We hope you all had a great Labor Day Weekend!

This month’s commentary is coming to you a bit later in the month than we like but its delay is for good reason.  John & I had the pleasure to visit Raymond James headquarters in Tampa, FL this past week to hear thoughts on the current economic outlook along with guidance on the current state of the markets, both the risks and the opportunities that lay ahead.  A highlight was getting to hear directly from RJ’s Chief Economist Eugenio Alemán, Ph.D. who shared his experience and insight on where the American economy is right now but, more importantly, where it appears to be going for the remainder of 2022 and into 2023.  (Side Note: One thing that continues to impress us here at Raymond James is the level-headed guidance, insight & commentary we get from some of the best minds in the business, people like Eugenio, that we have access to.)

Last month we saw the market really enjoying a mid-summer rally coming off the June lows.  While we love a market rally as much as the next guy, it was our opinion that we weren’t out of the woods yet and cautioned not to get wrapped up in what we thought was shaping up to be an overly optimistic view. Shortly thereafter, the FED had their annual fishing trip to Jackson Hole where Powell let the markets know just how bad they had misread the situation and used some strong words to expect “some pain” as they continue to raise rates to tame inflation.  That’s all it took to put an end to the rally-that-wasn’t and since then the markets have given most of it back.

September will bring us a few important data points with the CPI (inflation) reading on the 13th and another Fed rate increase (most likely another 0.50 – 0.75% hike) later in the month.  Both will help give some clarity to the current state but the trend remains firmly in-tact for now:  the economy is clearly slowing; albeit off of very high levels.    Add in the fact that, since 1950, September is historically the worst month of the year for stocks, Russia’s war with Ukraine, and a midterm election just around the corner and we don’t see how you can’t expect anything but continued volatility in the near term.

We continue to maintain a defensive position with a focus on dividends and quality while avoiding international and emerging markets.   Bonds look more attractive than they have in a decade with current yields of 3.5 – 4 % instead of 1.25 – 2%.   If you have cash on the sidelines, continue to buy the dips. If you’re fully invested already, take advantage of gains to rebalance your portfolio if volatility is a concern.   Otherwise, be patient; we expect the markets to normalize sooner than many may think.  And not to sound like a broken record, but we’ll remind you this every month:  The market has always gone up more than it’s gone down in the long run.

Here’s the current Brokered CD Rates, they recently edged up very slightly on the short end:

Lastly, we normally end with a Useless Fact of the Month but instead this time I’d just like to say my daughter gets her driver’s license this month so you may want to avoid the Clemmons side of Winston Salem for a while!

Please reach out if you have any questions on your portfolio or would like a review.

As always, thank you for being a client.

- Sean & John

This is not a recommendation to purchase or sell the stocks of the companies mentioned.  There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small‐cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad‐based flagship benchmark that measures the investment grade, U.S. dollar‐denominated, fixed‐rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. 
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