During periods of market turbulence, I take comfort in one of my favorite Warren Buffett quotes:
“Don’t watch the market closely.”
The Oracle of Omaha gave this sage advice in 2016, when Brexit, China’s economic issues, and the Federal Reserve’s interest rate policy roiled markets.
Now here we are in July 2022 and facing turbulent markets again, thanks to inflation, global growth, and uncertainties over the Fed’s interest rate policy.
Buffett’s words remind us that pullbacks, corrections, and bear markets are an expected part of the investing process.
Please reach out if you have any concerns, but in the meantime, take a break from watching too closely. That’s why we’re here.
Employment’s Mixed Signal
One of the holes in the “imminent-recession” narrative has been the labor market’s strength. Historically, recessions have been preceded by or concurrently with a weakening jobs market.
Friday’s employment report reflected a job market that continues to conflict with Wall Street’s recession fears. Employers added 372,000 jobs in June, a number that was above economists’ estimates of 250,000. Wage gains were robust (+5.1% year-over-year), though still below the inflation rate. The unemployment rate was unchanged at 3.6%.
Social Security Adjustments
As you might have heard, people are talking about a big bump in Social Security benefits next year.
The Senior Citizens League says payments could rise by as much as 8.6 percent in 2023, compared to an increase of 5.9 percent in 2022. That would mean an average benefit of $1,658 for the 70 million Social Security recipients on January 1.
To arrive at the cost-of-living adjustment (COLA), the Social Security Administration looks at third-quarter prices and compares them to a year prior. According to the Bureau of Labor Statistics, living costs are up about 8 percent.
What does this mean for you? Stay tuned as these numbers become more clear in the coming months.
Amazon and Alphabet Stock Splits
You may have heard that both Amazon and Alphabet recently announced stock splits. But what you may have missed is the subplot to the unfolding story.
The decision to split makes it likely that one of them will be added to the Dow Jones Industrial Average (DJIA) the next time there’s a change.
The DJIA is a price-weighted index, meaning its value is derived from the price per share for each stock divided by 30. Some believe that Google and Amazon were too high priced to get selected. By splitting, they improve their chances.
Amazon split 20-for-1 in early June with Alphabet planning to split 20-for-1 this Friday, July 15th.
A company’s board of directors makes stock-split decisions. Among other reasons, the board is looking to make the shares more affordable to employees and individual investors.
This Week: Key Economic Data
Wednesday: Consumer Price Index (CPI).
Thursday: Producer Price Index (PPI). Jobless Claims.
Friday: Retail Sales. Industrial Production. Consumer Sentiment.
This Week: Companies Reporting Earnings
Wednesday: Delta Air Lines, Inc. (DAL).
Thursday: JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Conagra Brands (CAG).
Friday: UnitedHealth Group (UNH), Citigroup, Inc. (C), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK), U.S. Bancorp (USB), The PNC Financial Services Group, Inc. (PNC).
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We trust you found this update to be educational and informative.
Let us once again emphasize it is our job to assist you. If you have any questions or would like to discuss any matters, please contact us anytime.
As always, we are honored and humbled you have given us the opportunity to serve as your financial advisors.