There are few things that can increase the anger of consumers like a rise in gasoline prices. Summer vacations are in full swing, and Labor Day is getting closer on the calendar. Moody’s Economist Scott Hoyt wrote that, “High interest rates, still-high inflation, slowing nominal wage growth, higher layoffs, recession fears, and financial system turmoil are all additional weights on the index (stock market indexes), battling the support from the strong labor market and recent improvement in the stock market.”
As we’ve continually observed, we are not completely sold on the idea being touted on the Street, that the nation will not experience a recession. While we are holding out hope that the inverted Yield Curve we write about is issuing a false indicator concerning a coming recession, we must take that signal at face value. The 2-year Treasuries now stand at 4.89%. 5-year Treasuries at 4.30% and 10-year Treasuries at 4.15%. The bottom line (for us) is that a recession is looming. The question we face is – how severe?
The University of Michigan Consumer Sentiment Survey Index issued Friday showed consumer confidence softening a bit so far this month, however people are still feeling things are heading in the right direction, gas prices notwithstanding.
Inflation fears continue to weigh on the market, however. The inflation rate rose to 3.2% in July, up from 3% in June. This played on the minds of investors this week. 30-year mortgages and gas prices are now very near the highest levels in more than 20 years. The 30-year fixed-rate mortgages are 7.38% nationally and the national average price of a gallon of gas is $3.83.
As you will recall from our posts from a few weeks ago, more and more Americans are living on borrowed money. Credit cards, lines of credit and home-equity loans being the lifeline. Credit card debt surpassed $1 trillion dollars for the first time in history at the end of June. Now, according to data from Bank of America, more Americans are tapping into their 401Ks due to financial stress. There has been a 36% increase in the second quarter from the same quarter in 2022.
On Tuesday, Moody’s cut the credit rating for 10 small and midsize lenders while signaling they may downgrade additional banks. This event caused the Small Cap market to retreat a bit due to the number of banks that make up the Small Cap index known as the Russell 2000.
This week the indexes pulled back, with the Dow Jones Industrial Average being the only winner, however not by much. The S&P 500 closed at 4,464 on Friday, down 0.31% for the week. The Dow closed at 35,281 +0.62. The NASDAQ stood at 13,644 Friday down 1.90% and the Russell 2000 closing the week at 1,925, off 1.65% by week’s end.
The Volatility Index (VIX) closed the week at 14.84, still expressing little fear among investors.
Unemployment benefits jumped by 21,000 from the week before, which is the highest number in one month. The number of unemployed stands at 248,000 nationally and this is signaling that the US labor market is beginning to soften which in turn may cause the Federal Reserve to not raise rates again in September.
When GaneWisdom/Market Edge went live in August 2022, the goal was to provide our subscribers top-tier market analysis and outlook to those with qualified accounts such as: IRAs, ROTH IRAs, 401Ks, and 403Bs. Our desire was to make this service affordable to anyone. Instead of paying thousands of dollars, or a percentage based on investment assets (which is how Guy managed his client’s money as a Registered Investment Advisor) GaneWisdom/Market Edge charges a very affordable $200 per year. Our subscribers now include those with non-qualified accounts as well as financial professionals. Our market analysis consists of market indicators, trends and strategies which allow our followers to avoid large losses usually associated with the traditional ‘Buy and Hold’ method. Our results speak for themselves and each of our Posts since our inauguration are available under the site’s heading ‘Archive’.
We have issued 2 Market Alerts this past week. As a subscriber to GaneWisdom/Market Edge you are being given unequalled access to the latest and most comprehensive market analysis available. Please note the following and move accordingly. Please watch for our Mid-Week Market Alerts in the event of shifting market conditions. Please read the following carefully.
| Entry Date | Exit Date | Return | |
| (8/14/23) | |||
| 1. S&P 500 loaded mutual fund or S&P 500 ETF | 5/19/23 | 8/10/23 | +9.8% |
| 2. A portfolio consisting of Financial Services. | 6/5/23 | +8.0% | |
| 3. A portfolio consisting of Leisure goods and/or services. | 6/12/23 | 8/11/23 | +0% |
| 4. A portfolio consisting of Telecommunications. | 6/12/23 | 8/11/23 | +2.2% |
| 5. A Small Cap - loaded fund. | 7/12/23 | 8/11/23 | -0.9% |
Please watch for our Mid-week Market Alerts should there be any.
* As is the case with any investment, use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore, our suggestion is using a portion of your portfolio and not the total in any one fund or subaccount. A portion should remain in Cash (Money Markets)
***** MARKET ALERT – Transfer 100% of your portfolio consisting of Financial Services by the close of the stock market on Monday, August 14th, 2023, to a CASH (Money Market) position.
