Read about financial developments and other topical relevant information to you.

Weekly Economic and Stock Market Commentary – September 18, 2023


As for the stock market specifically:

The quadruple witching gave us half of the Good Witch of the Up, and half the Wicked Witch of Down. Those who enjoy The Wizard of Oz might have to forgive me for trampling the movie we enjoyed as kids.

In my opinion, the markets sloughed off bad news on the inflation front – which I will discuss in more detail later. That is not a bad thing to occur. Nevertheless, modest movement after what came from the Department of Labor should find favor with investors.

There is a union strike underway right now. The union wants a substantial increase in pay and benefits, including a return to traditional pensions, and a 32-hour work week. If that becomes the standard, I believe there will be a shift in the equilibrium point, with little effect on living standards. One thing about the striking workers is that they dress better than some of our elected officials.

It is time for another silly season. “Our friends in Washington” are threatening another government shutdown. This is after (my words) giving their solemn words twice this year that they would get things right this time.

The risk assessing bullish percent indicators fell again for the week. The OTC is nearing the green zone, but let’s not get ahead of ourselves. I reiterate the recommendation of WEALTH PRESERVATION strategies for client money.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of September 15, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor provided August’s inflation reports last week. The Consumer Price Index rose by 0.3% from July to August. This turns out to be about double the rate the Federal Reserve calls its target rate. The rate from August 2022 to August 2023 was 3.7% and increased for the second month in a row. Energy prices earned the blame for the price rise. Core inflation was 4.3% on the annual basis – once again double what the Federal Reserve wants to see.

The flip side of the inflation coin is consumer spending. The Commerce Department told us retail spending rose by 0.6% in August. Much of the gain went into our gas tanks. As an aside, the price of gasoline now is higher than last year at this time. Energy suppliers raised their prices 10.5% more in August than in July.

The Census Bureau provided news concerning median household income. The median household income during 2022 fell $1750 from 2021 to $74,580. This marked the 3rd consecutive year of household income falling and is off $3670 since 2019 earnings. The report also noted that for those households earning between $94,000 and $153,000 saw earnings decline $4600 from 2021 to 2022, and $6700 from 2019 to 2022. This report also showed that child poverty more than doubled in 2022 from 2021. These numbers are adjusted for inflation.

The “Spending Party” clearly is in charge in Washington (for a while it was the left side of the isle, now it’s the right side. I’m sure glad both sides are looking out for our fiscal responsibilities). The Congressional Budget Office projects a deficit this year of $1,700,000,000,000. This is not the worst deficit on record. That occurred during the coronavirus year of 2020, but it is a new “non-emergency” year record. During the first 11 months of the year, interest payments rose by $149 billion to $644 billion. This level of commitment is exceeded only by the defense budget. This spending likely will exceed defense spending by the time “our friends in Washington” announce the next deal. Hold onto your hat, higher taxes will soon be on our door-step, someone has to pay for this!

Please contact me if you have any questions or want more information.