When I think about others or myself1, I do not think in terms of value. What comes to mind is someone’s laugh, or their smile or another personality trait that makes our connection a good one. When it comes to myself, I think on how I can make life a bit better for everyone no matter what I am doing. During conversations with others, the topics range from hobbies, the books that we are reading, our latest vacation – many varied subjects. But, the other day, I received a surprise when my husband and I were talking with some good friends of ours. Our marriage is like most; it has its ups and downs; the other couple felt very similar. I mentioned that my husband and I had met later in life, and I was trying to find a word to describe how we felt about finding each other. Our friend said “Oh, you feel lucky”. My husband said “No, it is more like when you are dead broke and then you stick your hand in your jeans pocket and you pull out this brand new twenty-dollar bill”. I was overwhelmed and tears came into my eyes because I knew the feeling that he had described. I then said to my friends “I now have a value!”. And, it made me feel very, very special.
Here at White Raven Financial2, we annually capture dreams and goals, net worth, income, career changes and verify risk tolerance. During meetings we try to capture any up-coming changes that may affect a life plan. A few days after meeting with our friends, I pondered the conversation that we had and thought about how we interact with clients in our business. That value is an important item in a relationship – it is being human and enjoying the company of those that we interact with each day. We appreciate everyone for enriching our lives!
Value for our current U.S. economy appears to be in a state of inflation and the Federal Reserve’s pledge3 that they will use all available tools to curb it (inflation). The increase in interest rates seems to bring about growth uncertainty and we are increasingly reading more articles about a possible recession. Ben Kirby, co-head of investments at Thornburg Investment Management, in a recent recap4 spoke about the current unsettled debate between inflation and a recession. In his opinion, we are more likely to see inflation to slow to about 4-5%. He further noted that there may be indicators to show a shallow slowdown but to not expect a financial crisis. James McCann, Deputy Chief economist for global investment company, abrdn, seemed to echo the slowdown thought when he wrote in a recent blog5 that abrdn believes the U.S. is in a soft patch at this time due to the impact of energy and food prices shock. The Institute Of Supply Management Index (ISM), which is often considered a key indicator of the state of the U.S. economy sported a number of 52.86 which marked the 27th consecutive month of expansion helping to support the thoughts that the economy is still “okay”.
Across the pond, we still hear about struggles that appear similar to ours: inflation, supply chain and interest rate increases. Russell Investments, in their Q3 2022 – Global Market Outlook7 noted the laundry list of concerns that are affecting other countries and also mentioned the tightening paths for most central banks. They further mentioned the many “ifs” that challenge the Eurozone with the one of the main concerns being energy prices and how that will affect future economic growth. The thought that Europe is already in a recession was penned by Mitchell Harman in a Marketplace late August blog8. In the article, he mentioned the ties of a strong U.S. dollar and the dollar’s effect on other world economies.
For many of us, one of the largest monetary values in our lives, in addition to our personal home, is our retirement funds. With the current market, it may make us uneasy to see the value drop, bringing with it a feeling of loss. As we mentioned in our quarterly notes: “as we know from the past, if history repeats itself, this too shall turn around; we just don’t know when. We do know that if inflation stops, or the war ends, that either of those events could be a definite positive” and we may then see an improvement in the market. “Because you are alive, everything is possible” (Thich Nhat Hanh).
As the Feds worked to fight the rising inflation, the markets did not match the summer weather or the rising inflation and instead turned cold again sliding backwards bit-by-bit throughout the month. Of the three major indices, the blue-chip barometer (the DOW)* posted a loss of -3.77% for the month. The S&P 500 (SPY)* followed suit, sliding a bit more and notched a -4.08% loss. The tech-rich Nasdaq Composite (COMPTR)* skated past its older brothers and came in with a -4.64% loss. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab). On Tuesday, Aug 30th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller10 report. The report showed that for the reporting month home prices across the U.S. appeared to continue to increase. The June the 20-city composite Home Price Index10 reported a 18.6% year-over-year gain; down 1.9% from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of June showing a 0.4% increase over the prior month of May for the 20-city composite index.
Regards and thank you (as always) for reading,
The Team at White Raven Financial
Advisory services offered through White Raven Financial Services, Inc. a Registered Investment Advisor in the State of Washington.
*Indexes are unmanaged and do not reflect service fees, commissions, or taxes. You cannot invest directly in an index. Past performance is not necessarily indicative of future results. Returns for the DOW, S&P 500 and the NASDAQ are the total return (price only) provided by Morningstar as August 31, 2022. Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment loss.
*The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.
*The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues.
*The NASDAQ is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks.
Sources:
- https://www.whiteravenfinancial.com
- https://www.cnbc.com/2022/08/26/powell-warns-of-some-pain-ahead-as-fed-fights-to-lower-inflation.html
- https://www.thornburg.com/video/observations-in-equities-recession-fears-shadow-the-stocks/
- https://www.abrdn.com/en-us/investor/insights-thinking-aloud/article-page/recession-may-be-coming-but-it-isnt-here-yet?opendocument&utm_campaign=AMER_Our%20Thinking%20Newsletter_082522&utm_medium=email&utm_source=Eloqua&utm_content=CAAML000001734000&utm_company=White%20Raven%20Financial&cn=Newsletters
- https://www.actionforex.com/contributors/fundamental-analysis/461477-ism-manufacturing-remains-unchanged-registering-27th-consecutive-month-of-expansion/#:~:text=ISM%20Manufacturing%20Remains%20Unchanged%2C%20Registering%2027th%20Consecutive%20Month,52.8%2C%20beating%20expectations%20for%20a%20pullback%20to%2051.9.
- https://russellinvestments.com/us/global-market-outlook
- https://www.marketplace.org/2022/08/29/why-us-dollar-is-strong/
- * https://Morningstar.com (index)
- https://www.prnewswire.com/news-releases/sp-corelogic-case-shiller-index-decelerated-in-june-301614774.html
