Weekly Market Commentary 10.16.2023

Jimmy Lee | Oct 18, 2023

Categories

Markets were resilient.

Last week, investors had a lot to process – geopolitics, inflation, consumer sentiment, the possibility of government shutdown – and markets were volatile. Toward the end of the week, some investors were reassured when earnings season kicked off with reports showing major banks posted stronger-than-expected profits during the third quarter. Here’s a brief look at what happened during the week:

War in Israel. Hamas terrorists attacked Israel, and Israel declared war. The human toll has been high and continues to increase. The conflict has the potential to spread across the region. While economics is a lesser concern, the war may disrupt energy supplies, keeping inflation – and interest rates – higher for longer, according to Ziad Daoud, Galit Altstein and Bhargavi Sakthivel of Bloomberg.

U.S. inflation proved persistent. In September, the Consumer Price Index (CPI) showed prices rose 3.7 percent year-over-year. When volatile food and energy prices were excluded, inflation was 4.1 percent year-over-year. Inflation has fallen a long way from its June 2022 peak of 8.9 percent, but the decline has stalled, and inflation remains well above the Federal Reserve’s two percent target. That reinforces the idea that the U.S. Federal Reserve may leave rates higher for longer, reported Chris Anstey of Bloomberg.

Consumers were less optimistic. Inflation is affecting the finances of individuals and businesses, according to the University of Michigan’s Surveys of Consumers Director Joanne Hsu. The October consumer sentiment survey found, “Assessments of personal finances declined about 15%, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19%. However, long-run expected business conditions are little changed, suggesting that consumers believe the current worsening in economic conditions will not persist.”

U.S. budget negotiations remained stalled. Congress has about a month left to negotiate and pass the appropriations bills necessary to fund the U.S. government for fiscal 2024. However, the House of Representatives currently cannot proceed without an elected Speaker of the House. On November 17, stop-gap funding measures end. Without additional funding measures a government shutdown is possible, reported David Morgan, Richard Cowan, and Moira Warburton of Reuters.

Banks did well in the third quarter. Earnings season got off to a good start last week. Major U.S. banks were the first to report, and some saw profits rise significantly in the third quarter. One large bank reported its profit was 35 percent higher, year-over-year.

Major U.S. stock indices finished a volatile week higher. Bond markets produced mixed results with yields on longer maturities of U.S. Treasuries moving lower.

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; U.S. Treasury; 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.

WHERE IN THE WORLD DO PEOPLE SLEEP WELL? Scientists have been studying how to slow aging and extend longevity. One factor that can affect your lifespan is how well you sleep. According to a new study, there are five hallmarks of a good sleeper. They:

Sleep 7 to 8 hours a night,
Have little difficulty falling asleep,
Stay asleep through the night on most nights,
Feel well-rested after waking up most mornings, and
Don’t rely on sleeping pills.

People who are good sleepers tend have longer life expectancy, reported the American College of Cardiology. Men who sleep well live 4.7 years longer, on average, and women who sleep well gain 2.4 years, on average.

Of course, there are always exceptions. Scientists have discovered that some people are naturally short sleepers. They can get far less sleep, often four to six hours a night, without suffering any negative effects. So far, research has identified three genes that allow people to sleep less without experiencing physical or cognitive costs, reported Genetic Engineering and Biotechnology News.

Where you live may affect the quality of your sleep, too, according to a National University in Singapore study. It found that the least successful sleepers are in Asia, where people tend to snooze for less than 6.5 hours a night during the week. The most successful sleepers are in Ireland, New Zealand, Slovakia and the Netherlands. In general, people in countries with high-quality sleep averaged seven hours on weeknights. People in the United States weren’t far behind, slumbering for 6.9 hours, on average, from Monday through Friday.

Life expectancy is a key factor when planning for retirement. If you have any questions about how lifespan can affect retirement saving and retirement income, get in touch.

Weekly Focus – Think About It

“Experience is not what happens to you; it is what you do with what happens to you.”

—Aldous Huxley, author

Best regards,

The Wealth Consulting Group

Sources:

https://finance.yahoo.com/news/nasdaq-sinks-dow-edges-up-after-healthy-big-bank-earnings-stock-market-news-today-164152139.html

https://www.bloomberg.com/news/features/2023-10-12/israel-hamas-war-impact-could-tip-global-economy-into-recession?srnd=markets-vp (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/10-16-23_Bloomberg_Wider%20War%20in%20Middle%20East%20Could%20Tip%20the%20World%20Economy%20Into%20Recession_2.pdf)

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

https://fred.stlouisfed.org/graph/?g=rocU

https://www.bloomberg.com/news/articles/2023-10-12/us-cpi-report-september-2023-5-key-takeaways-on-inflation-core-measure

http://www.sca.isr.umich.edu