Weekly Market Commentary September 27, 2022

Fast Facts – What happened this week?

Following the evidence, as customs officials at Germany’s Duesseldorf Airport found an 8-inch-long snail on an airport baggage truck and followed its slime-trail to a sack containing 93 other giant snails being shipped from Nigeria for sale as meat.

The bees are alright, after Buckingham Palace’s royal beekeeper, 79-year-old John Chapple, carried out an unusual duty after Queen Elizabeth II’s death: informing the bees the queen had passed and that their new master was King Charles III. Chapple also placed black mourning ribbons on the hives. The tradition, thought to date back centuries, is built on a superstition that bees not told of important changes in their keepers’ lives might fail to produce honey or leave the hive. “You knock on each hive and say, ‘The mistress is dead, but don’t you go. Your master will be a good master to you,’” Chapple explained.

X marks the spot, after the city of Sheldon, Iowa, planned to make the opening of a 50-year-old time capsule a centerpiece of its 150^th anniversary. Unfortunately, no one knows exactly where it is buried. The unveiling of the time capsule- buried during Sheldon’s centennial celebration- is on hold until a company can be brought in to locate it with underground radar somewhere in the park. “We still have every intention of digging it up,” said Chamber of Commerce director Ashley Nordahl. “It’s just a little more involved than what we originally had planned.

Weekly Focus – Think About It

“Knowledge is the treasure of a wise man.”
—William Penn, founder of Pennsylvania

The Markets

Central bank tightening sparked recession fears.

Last week, the Federal Reserve (Fed) raised the federal funds rate for the fifth time this year. During 2022, the Fed has lifted its benchmark rate from near zero to 3.12%. Fed policymakers indicated that they expect to raise the rate again this year. That’s going to make borrowing more expensive as rates on credit cards, home mortgages and business loans increase.

Frankly, that’s the Fed’s goal. It wants to tamp down consumer and business spending. When spending falls, demand for goods and services falls and so do prices. Lower prices mean lower inflation. Unfortunately, inflation has a long way to fall. The Fed’s inflation target is 2%. In August, the Consumer Price Index showed inflation was 8.3%.

The Fed isn’t the only central bank hiking its country’s rate. “We are experiencing one of the most synchronized bouts of monetary and fiscal tightening in the past five decades,” reported Daniel Moss of Bloomberg. Ninety central banks have raised rates during 2022.

“The relentlessness with which central banks are increasing interest rates reflects alarm at rising prices — and an aversion to being portrayed as insufficiently courageous at a time of economic peril. With so much hiking, officials should fret about the broader impact of the course they are on. The recession they are courting may be no ordinary downturn.”

The possibility of a global recession was top of mind for investors last week. Major U.S. stock indices dropped lower and yields on U.S. Treasury yields reached multi-year highs

In times like these, people often worry about how to protect the wealth they have accumulated. In the investment industry, we say that past performance is no guarantee of future results; however, during market downturns, it can be reassuring to consider current market events within the context of long-term market events.

A chart of the performance of the Standard & Poor’s 500 Index shows that the path of investing is rarely smooth and upward. Bull markets follow bear markets with corrections along the way. The accumulation of evidence over time supports the idea that staying the course is a sound choice during market downturns. It takes patience and discipline, and it can be particularly difficult to do during times like these.

Yeet. They added Pumpkin Spice. You may be more familiar with some of the new words Merriam Webster added to its dictionary than others. Earlier this month, 370 words were added to the lexicon, including:

• Pumpkin spice. Autumn is pumpkin spice season. The flavor, which is now two decades old, is available in lattes, candles, pancake mix, lip balm, beer and deodorant, among other items. It also can be found in the dictionary where it is defined as “a mixture of usually cinnamon, nutmeg, ginger, cloves, and often allspice that is commonly used in pumpkin pie.”
• Yeet. Even though ‘yeet’ was the American Dialect Society’s slang word of the year in 2018, Merriam Webster did not add it to the dictionary until this year. They explained, “When a new word starts making the rounds, we don’t just yeet it into the dictionary the first time we encounter it.” Yeet is slang, “used to express surprise, approval, or excited enthusiasm” or “to throw especially with force and without regard for the thing being thrown.”
• Magnet fishing. Rather than tie a hook on a line and cast for fish, magnet fishers are hoping to attract sunken treasures. The activity is a meld of environmentalism and treasure hunting that is defined as, “the sport or hobby of using a strong magnet attached to the end of a rope to find metal objects in bodies of water.”

Some of the new entries are abbreviated versions of words that have been part of our vocabulary for a long time. This may be the inevitable outcome of adapting to text and social media communications.

Best regards,
John Klevens, CFP®

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Sources:
Carson Consulting
Johns Hopkins to reduce COVID data tracking (axios.com)
Fast Facts. “Controversy of the week”. The Week Magazine, 23 September 2022, Volume 22, Issue 1097, pp 6