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Key Points for the Week
If you look back over the last 20 years, September has been the worst performing month for the Standard & Poor’s 500 Index, according to Nasdaq.
This year, the S&P 500 dropped 4.8 percent in September. That wasn’t enough to wipe out gains from earlier in the third quarter, and the Index finished the quarter slightly higher. The Dow Jones Industrial Average and the Nasdaq Composite Index also tumbled in September. Their losses erased the previous two month’s gains, so the Dow and Nasdaq finished the quarter lower than they started it, reported Caitlin McCabe and Caitlin Ostroff of The Wall Street Journal.
Investors had a lot to consider during September and over the third quarter, including:
One result of COVID-19 is that life expectancy for births in 2020 dropped from 2019. In the United States, life expectancy at birth has fallen by more than one year. Italy, Poland and Spain also have seen life expectancy drop by more than one year, reported The Economist. Lifespan increased in two countries: Denmark and Norway.
The commercial pipeline that each year brings $1 trillion worth of toys, clothing, electronics and furniture from Asia to the United States is clogged and no one knows how to unclog it…the median cost of shipping a standard rectangular metal container from China to the West Coast of the United States hit a record $20,586, almost twice what it cost in July, which was twice what it cost in January, according to the Freightos index. Essential freight-handling equipment too often is not where it’s needed, and when it is, there aren’t enough truckers or warehouse workers to operate it.
David Lynch, The Washington Post
Toward the end of September, more than 70 container ships were anchored near the West coast, waiting for a berth to open so goods could be delivered.
As if these issues weren’t enough, investors also had to process the potential effects of a global energy crisis, China’s regulatory crackdown, and another U.S. debt-ceiling standoff.
Equity markets struggled in September as interest rates, inflation concerns, and developments in China all weighed on stock market averages. The S&P 500 surrendered recent gains as large-cap growth companies led the market lower. Large-cap growth has been the top performing style box since the beginning of the second quarter.
Inflation continues to show signs of moderating in the U.S. while remaining above pre-pandemic levels. Yearly inflation inched higher. The last two months have increased 0.3% (3.7% annualized), which is faster than before the pandemic but slower than earlier this year. We continue to anticipate inflation running at 4-5% over the next 4 to 5 years.
As expected, lawmakers reached a compromise to avoid a partial government shutdown. We expect to see continued brinkmanship on key issues. Democrats also continue to work on cobbling together majorities for infrastructure and spending bills.
The S&P 500 sagged in a volatile week and had the largest weekly dip since late February. Concerns about increasing long-term interest rates contributed to the slide. The Bloomberg U.S. Aggregate Bond Index added to last week’s losses. The September employment report leads a list of economic releases this week.
The pandemic accelerated the adoption of autonomous checkouts at retailers. Some stores have self-checkouts, while others have installed a “combination of sensors, cameras, computer vision and deep learning” that makes it possible to eliminate cashiers and checkouts entirely, reported Anna Oleksiuk on the Intellias blog.
At the other end of the shopping-experience spectrum is the “Kletskassa,” also known as the “chatty checkout,” which was implemented by a large grocery store chain in the Netherlands. It’s a checkout line that promises conversation with the cashier.
1.3 million people in the Netherlands are older than 75 years – and one large supermarket chain is making sure they’re not getting too lonely in their elder years. The Dutch government with its campaign, ‘One Against Loneliness,’ has galvanized organizations, towns, companies, and individuals to find solutions. The [grocery store chain] is doing their part with its innovative chatty check outs.
The Good News Network
The slower, chatty lane was developed specifically for older citizens, but may appeal to a much wider group of people on days when they have the time to engage.
Traders sometimes use the phrases “risk on” and “risk off” to describe trades or positioning designed to profit from market rallies or protect from market declines. But the reality is risks are always present and predicting short-term market moves is extremely difficult.
While risk is constant in the markets, portfolios face greater risks at certain times. Being prepared can reduce the odds of a rash move to lower risk when the market declines. Identifying specific risks also helps to keep them top of mind and balances the temptation to chase higher returns.
Each quarter we analyze the five key risks in the market and provide a summary of why those risks were added or retained on our list. Today’s update shares our current list of key risks.
We remain concerned about the toxic political climate in the United States. We do not list it as a top 5 concern because we believe that some of the drama is for theatrical effect and compromise or resolution will occur.
We are concerned that many investors have left themselves emotionally vulnerable to a market pullback that may exacerbate a moderate decline. At the same time, history has taught us most market risks are either managed, mitigated, or innovated away and that an optimistic outlook remains the most prudent. Please work with your advisor if you are concerned your portfolio reflects too strong a tilt in either the “risk on” or “risk off” direction.
The current debate over the Infrastructure Bills is not yet over and many of the proposed tax proposals may be amended or dropped before the Bill becomes final. Here are some of the tax changes being considered:
October 6, 1866: The Reno Brothers Carry Out the First Train Robbery in U.S. History
On October 6, 1866, the brothers John and Simeon Reno staged the first train robbery in American history, making off with $13,000 from an Ohio and Mississippi railroad train in Jackson County, Indiana.
Trains had been robbed before the Reno brothers’ holdup. But these previous crimes had all been burglaries of stationary trains sitting in depots or freight yards. The Reno brothers’ contribution to criminal history was to stop a moving train in a sparsely populated region where they could carry out their crime without risking interference from the law or curious bystanders.
Though created in Indiana, the Reno brother’s new method of robbing trains quickly became very popular in the West. Many bandits, who might otherwise have been robbing banks or stagecoaches, discovered that the newly constructed transcontinental and regional railroads in the West made attractive targets. With the western economy booming, trains often carried large amounts of cash and precious minerals. The wide-open spaces of the West also provided train robbers with plenty of isolated areas ideal for stopping trains, as well as plenty of open spaces where they could hide from the law. Some criminal gangs, like Butch Cassidy’s Wild Bunch, found that robbing trains was so easy and lucrative that for a time they made it their criminal specialty.
It’s hard to be a diamond in a rhinestone world.
Dolly Parton, Singer and Songwriter
What makes a nation great is not primarily its great men, but the stature of its innumerable mediocre ones.
Jose Ortega y Gasset, Philosopher and Essayist
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Portions of this newsletter were prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with SPC or S&M. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. This information is not intended as a solicitation of an offer to buy, hold, or sell any security referred to herein. There is no assurance any of the trends mentioned will continue in the future.
Any expression of opinion is as of this date and is subject to change without notice. Opinions expressed are not intended as investment advice or to predict future performance. Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Past performance does not guarantee future results. Investing involves risk, including loss of principal. Consult your financial professional before making any investment decision. Stock investing involves risk including loss of principal. Diversification and asset allocation do not ensure a profit or guarantee against loss. There is no assurance that any investment strategy will be successful.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as "The Dow" is an index used to measure the daily stock price movements of 30 large, publicly owned U.S. companies. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.
The MSCI ACWI (All Country World Index) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2007, the MSCI ACWI consisted of 48 country indices comprising 23 developed and 25 emerging market country indices. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.
The Bloomberg Barclays US Aggregate Bond Index is a market capitalization-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented.
Please note, direct investment in any index is not possible. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.
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