2023 Q1 In Review - Integrity Wealth Advisors, Ventura & Ojai, California

More documents

Info

ECONOMIC CHARTS & NOTES CONSUMER PRICE INDEX The monthly inflation reading came in below 6% for the first time since September 2021, a sign that aggressive Fed rate hikes are moderating consumer prices. Food prices continued to climb while gasoline moved off December lows. CONSUMER SPENDING Real household disposable income is growing again after almost 2 years of declines. In turn, real personal spending increased from a cautious holiday shopping season. Y/Y % Chg 8% 7% 6% 5% 4% 3% 2% 1% 0% CPI Less Food CPI All 2018 2019 2020 2021 2022 % Chg Year-over-year 30 25 20 15 10 5 0 -5 -10 -15 -20 -25 Jan '19 Jul '19 Consumption Jan '20 Jul ' 20 Jan '21 Jul '21 Disposable Income Jan '22 Jul '22 Jan '23 Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Economic Analysis JOB OPENINGS & HIRES Retail hiring picked up from a slow holiday hiring season as stores weighed the impact of inflation and higher rates on consumer spending. Job openings decreased as workers were attracted to higher wages and sought second jobs. Retail Openings Retail Hires GDP The U.S. economy grew more than expected in Q4. Resilient consumers and the government continued to spend, offsetting a weakened housing market. GDP Amount in Thousands 1500 1200 900 600 300 0 Jan '18 Jul '18 Jan '19 Jul '19 Jan '20 Jul '20 Jan '21 Jul '21 Jan '22 Jul '22 Jan '23 % Growth 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2019 2020 2021 2022 Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Economic Analysis
STOCK AND BOND CORRELATION 2023 Q1 IN REVIEW The dance between stocks and bonds is starting to shift—and it could mean that investors will have a way to play defense once again. For a while now, stock and bond prices have moved together in lockstep. When bond yields rise, their prices fall, and that is what happened for much of last year. From the S&P 500’s all-time high in early January 2022 to its bear market low in early October, the 10-year Treasury yield roughly doubled to almost 4%, causing both stock prices and bond prices to tumble. The SPDR S&P 500 ETF (SPY) dropped 18% including reinvested dividends, while the iShares 20+ Year Treasury Bond ETF (TLT) fell 31%. But the correlation between stocks and bonds has been starting to change. In recent weeks, stocks have been falling, but so have bond yields, which means bond prices have been rising. The S&P 500 is down a hair from its close on March 9, right as the banking problems started hitting the wires. In that time, the 10-year yield has fallen to just under 3.5%, from almost 4%. There is a good reason for that. The risk that markets are reflecting is that the banking problems, if they continue, will hit the economy, and eventually corporate earnings. That’s why market participants are selling riskier stocks and rushing into government bonds for safety, a classic “risk-off” market. Another way to look at the markets is just by observing the stock and bond correlation itself. Last year, the S&P 500’s correlation to the price of the iShares 20+ Year Treasury Bond ETF reached its highest point since 2005, according to DataTrek. Now, the correlation shows that bond and stock prices are starting to move in opposition to each other, which means that bonds should be able to perform their historical task of providing safety. Source: Bloomberg, FactSet, Federal Reserve, J.P. Morgan Asset Management. Market expectations are based off of the respective Federal Funds Futures contracts for December expiry. *Long-run projections are the rates of growth, unemplovment and inflation to which a policymaker expects the economy to converge over the next five to six ears in absence of further shocks and under appropriate monetary policy.
Page 1 and 2: iwaplan.com Q1 2023 IN REVIEW
Page 3: A WILD RIDE TO START THE NEW YEAR 2
Page 7 and 8: 2023 Q1 IN REVIEW CASH BEING YANKED
Page 9 and 10: SINCE MARCH 2020, WE HAVE SEEN: 202
Page 11 and 12: INVESTMENT COMMITTEE 2023 Q1 IN REV
Page 13 and 14: Future FINANCIAL four-year college
Page 15 and 16: HOW DOES DONATING TO CHARITY REDUCE

2023 Q1 In Review - Integrity Wealth Advisors, Ventura & Ojai, California

Create successful ePaper yourself

Delete template?

Save as template?