May 22, 2023

Weekly Market Update

By Michael McKeown, CFA, CPA - Chief Investment Officer

Weekly Market Update

Chart of the Week

The Federal Reserve’s goal is to get inflation back to its 2% target. During the decade of the 2010s, inflation stayed low despite interest rates near zero percent. In this cycle, inflation hit 9% in June of 2022. The fiscal stimulus following the first two years of this expansion amounted to 35% of the Gross Domestic Product (GDP). This buoyed spending in all parts of the economy, pushing up the price of goods and then services. Households had a tough time keeping up with the price gains. The trend may officially be changing. Over the past one-year period, inflation fell to 5%, and wages kept up. With supply chains healing along with less of a fiscal boost, incomes may be set to top inflation in the months ahead.

How have U.S. wages kept pace with inflation?

What We’re Reading

Google just showed how Big Tech will win again in AI – MSN
Artificial Intelligence Is Not Going to Kill Us All – Slate
Consumer Checkpoint: Higher Income pullback – Bank of America
More Evidence that Stock Picking is a Negative for Retail Investors – Alpha Architect
In Case You Missed It… You are now a Portfolio Manager. 10 Rules for Fund Selection – Marcum Wealth

Podcast of the Week

Why the US Housing Market Is Still Broken After Fed Hikes, with Ali Wolf – Odd Lots, Bloomberg

Last Week

Retail sales came in below expectations last month. Industrial production and new housing starts outpaced estimates. Housing may have found a temporary floor with the stabilization in interest rates. Continuing claims fell from the prior week.


The Past Week

The Week Ahead

We will be watching how the data from S&P on Tuesday show services and manufacturing look for May. In addition, the personal consumption expenditures prices index will be of interest. It seems inflation data is slowing relative to the hot pace from one year ago.

The Week Ahead

Thank you for reading.

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