What Happened: Dow advances over 1,600 points for the week

What Does It Mean: Other than the obvious, it’s a nice reminder of what can happen when the negativity becomes as high as it was last week. Our ‘Sour as I’ve Seen it Piece’ worked to point out the other side of volatility that gives rise to markets just when emotions want to take hold. In my opinion, staying the course is often the best strategy and this is another great example of how important it is to remain objective and open minded to the good that can occur when all others are simply pointing to the bad.

Quint discusses this a bit on local radio this week which can be heard HERE.

Why do we care? The rise in stocks this week began on Monday when the Dow advanced over 500 points for no apparent reason whatsoever. Often this occurs when so many are looking for a weekend catalyst to send stocks lower that unfortunately for the bears, never comes. Wednesday opened with lower than anticipated ADP Employment data as well as a surprising drop in the Institute of Supply Management Manufacturing reading which was much less than expected. These data points suggest an economic slowdown which in turn suggests lower inflation and thus lower rates. As if on script the Fed decision later that day to keep rates steady and a much more moderate press conference sent stocks higher into Wednesday afternoon and Thursday.

>>>>>>>>>>>>>>

What Happened: Jamie Dimon from JPM calls out Federal Reserve. Stan Drukenmiller calls out Treasury.

What Does It Mean: In my opinion, our country finds itself in a difficult predicament as US spending seems out of control with no end in sight. With significantly higher interest rates, this means that all US debt now carries a hefty interest rate expense and thus impacting other spending obligations. When high profile people such as Jamie Dimon the chairman and chief executive officer of JPMorgan Chase or Stan Drukenmiller, in my opinion and many others one of the greatest investors of our generation, begin to publicly call out fiscal issues such as this, I believe political pressure begins to mount. With an election season right around the corner, budget deficits and national debt take more and more precedence.

Why do we care? Stocks have taken their cue from interest rates, which are now impacting much more than just inflation. As US interest rate policy moves into the political realm, I am of the opinion that political pressure will be yet another roadblock for higher rates. If this outlook is accurate, I further believe we have seen the peak in short term rates and inflation. As rates come down it would make sense to see stocks advance and thus this week may be a precursor to what we see throughout the remainder of the year and into 2024. Just when so many others remain bearish and pessimistic, I continue to find myself in the optimistic camp going forward.

Until next time

~ Quint

 

Did you know? Joule works with clients all throughout the United States. With our process of utilizing technology and online planning portal, there is no geographic limitation to whom we can help. If you need a second opinion or want to explore what an advisory relationship with Joule would look like, review more info on our site and we’d be happy to discuss your current situation.

Disclosures

Joule Financial, LLC is registered as an investment adviser with the SEC. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability. A copy of Joule’s current written disclosure brochure filed with the SEC which discusses among other things, Joule’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

This does not constitute an offer or solicitation. This information should not be considered investment advice. Opinions expressed reflect the judgment of the author and are current opinions as of the date appearing in this material only. While every effort has been made to verify the information contained herein, we make no representations as to its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Past performance does not predict future results. Content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. All investing involves risk, including the loss of some or all of your investment.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future. Diversification does not guarantee a profit or protection against a loss in a declining market.

Hyperlinks in this letter are provided as a convenience, and we disclaim any responsibility for information, services or products found on websites linked hereto.

Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees. Investors cannot invest directly in an index. Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ from a particular hedge fund. For example, a hedge fund may typically hold substantially fewer securities than are contained in an index.

The S&P 500® Index is a widely recognized, unmanaged index of 500 common stocks which are generally representative of the U.S. stock market as a whole.