The Markets

Markets are playing Federal Reserve Clue.

Last week, investors parsed the monthly Employment Situation Summary from the Bureau of Labor Statistics for clues about whether the Fed will raise the federal funds rate at its next meeting or leave the rate unchanged, reported Megan Leonhardt of Barron’s. The Fed has been aggressively raising the rate to slow the pace of inflation. Higher rates typically lead to slower economic growth and fewer jobs, so the employment report offers some signals about the Fed’s progress so far and what may come next.

After perusing the report, investors appeared to agree the Fed was likely to continue raising the federal funds rate. Barron’s reported, “The labor market is still running more warm than cool—June’s jobs data is still well above the baseline standards of a tight labor market—and it builds the case for Fed officials to press the play button and again increase rates in July. On Friday, the likelihood that the Fed would raise rates during the upcoming July [meeting] stood at 94.9%, according to the CME FedWatch tool.”

Here are some of the report highlights:

Overall, the unemployment rate ticked lower (3.6 percent). Generally, low unemployment a sign of economic strength. The unemployment rate varied by race. It was 3.1 percent for the White population, 3.2 percent for the Asian population, 4.3 percent for the Hispanic/Latino population, and 6.0 percent for the Black population.

Fewer jobs were created in June (209,000) than in May (306,000). The slower pace of job creation is one sign the economy may be losing steam. It’s also possible the jobs numbers could prove to be less robust than the first estimate suggests. The preliminary employment numbers for April and May were revised lower in the June report.

Workers took home more pay. Average hourly earnings increased in June and were up 4.4 percent over the last 12 months. That means consumers had more money in their pockets to spend. Since consumer spending is the main driver of economic growth in the United States, this was probably not what the Fed wanted to see.

Last week, major U.S. stock indices finished lower, reported Barron’s Data. Yields on U.S. Treasuries finished the week higher.


Data as of 7/7/23 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 Index -1.2% 14.6% 12.7% 11.8% 9.6% 10.4%
Dow Jones Global ex-U.S. Index -1.6 5.8 8.0 2.9 0.4 2.3
10-year Treasury Note (yield only) 4.1 N/A 3.0 0.7 2.9 2.7
Gold (per ounce) 0.5 6.1 10.0 2.4 8.8 4.5
Bloomberg Commodity Index 0.4 -9.7 -11.5 15.3 3.4 -2.1

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

It’s Old Fashioned

From cuff-and-collar boxes to floppy disks, the accoutrements of “modern” life change over time. Gadgets and gizmos that were once essential become obsolete as fresh, and often more efficient, options gain a following. See what you know about the way life used to be by taking this quiz.

  1. Hand-cranked churns were an important tool in many households from the mid-1800s through the 1940s. What were they used for?
    1. Drying clothes
    2. Canning vegetables
    3. Producing butter
    4. Making wine
  2. At the time of the Civil War, what was the most common form of communication?
    1. Letters
    2. Gossip
    3. Newspapers
    4. Telegraph
  3. Patterns of holes in stiff paper proved to be quite valuable in various industries during the 1800s and 1900s. Some punched cards had the phrase “do not fold, spindle or mutilate” printed on them. What were punched cards used to do?
    1. Automate weaving
    2. Record and replay harmonium (pump organ) performances
    3. Process business and government data
    4. All of the above
  4. Before computers and smart phones became ubiquitous, people used rotating card files to organize contact information. What were these devices called?
    1. Spinfiles
    2. Rotarchives
    3. Rolodexes
    4. Spindexes

Bonus: The correct answer is a mashup of two words. What are they?

Answers: 1) c; 2) b; 3) d; 4) c; Bonus: Rolling and Index

Weekly Focus – Think About It

“That men do not learn very much from the lessons of history is the most important of all the lessons of history.”

—Aldous Huxley, author

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
  • Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
  • The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
  • All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
  • The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and 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.
  • You cannot invest directly in an index.
  • Stock investing involves risk including loss of principal.
  • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
  • The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
  • These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
  • This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
  • The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
  • Consult your financial professional before making any investment decision.

Sources:

https://www.barrons.com/articles/june-jobs-report-data-today-b5d93180?mod=hp_LEAD_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-10-2023_Barrons_US%20Jobs%20Growth%20Slowed%20in%20June_1.pdf)

https://www.imf.org/external/pubs/ft/fandd/basics/unemploy.htm

https://www.bls.gov/news.release/empsit.t02.htm

https://www.bls.gov/news.release/empsit.t03.htm

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-10-23_Barrons_Data_6.pdf)

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2023

https://www.brainyquote.com/topics/history-quotes

https://churncraft.com/blogs/the-churncraft-journal/churn-history-crank-churns

https://www.encyclopedia.com/history/news-wires-white-papers-and-books/1850-1877-communications-overview

https://en.wikipedia.org/wiki/Punched_card

https://en.wikipedia.org/wiki/Rolodex

ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.