Does your neck hurt? Whiplash is the only way I can come up with to describe the up and down that occurred in the past quarter. The first half of the quarter saw a rally that started in June in the stock market and ended abruptly in mid August. The drop continued through the month of September. The hardest part of this whiplash is that it is self inflicted. The Fed has continued to raise rates, slamming the brakes on inflation while effectively slamming the breaks on the financial markets. The reason the financial markets do not like higher interest rates is that it raises the cost of borrowing money. A year ago interest rates were hovering just above 3% and as of the beginning of October have more than doubled to just above 7%. These higher rates have impacted the residential real estate market. In doing this, both the stock and bond markets have dropped sharply and in unison. Stocks have dropped due to speculation of the economy slowing. Bond values have dropped as expected by moving lower with higher rates. The Federal Reserve sees inflation as the biggest threat to the economy and Powell feels that a slowing of the economy is the lesser of the evils to restore price stability.
We know that long term returns are more tied to time in the market versus timing the market. Stay the course and focus on the long term.
On the Personal Side:
Lila has entered 8th grade and will be following in my footsteps and be a freshman at Page High School next year. I cannot help but think back and reflect on how much less mature I was at her same age. She is so diligent and organized I may have to start recruiting her to come work here.
Amelia is a force to be reckoned with. She is rocking the heavier workload in 5th grade, loving her dance team, and was recently cast in her first school play.
Our trip to see the National Parks in Washington State was amazing. Mount Rainier National Park, Olympic National Park and North Cascades National Park definitely delivered. We were in awe at some of the natural wonders we saw. I take full blame for the largest error of the trip, that we rented a Tesla and experienced the challenges associated with charging it in Eastern Washington.
On the Business Side:
Kam finished her licensing and passed her Series 66. We are super proud of her as this was a life goal for her and a huge achievement. She is currently enrolled in Other Voices through the city as well where she is growing her knowledge about diversity and inclusion.
Bristey is having a baby! We are so excited for she and her husband Zach as they will have their third child in February.
Anna got married as well and just returned from her honeymoon in Hawaii with her husband Phillip. We are so excited for them. The whole office was at the wedding although I left a bit early and missed Ben’s dance moves.
If you need anything at all, we ask you call the office directly at 336-540-9700 or email us at [email protected]. Now you can also text our dedicated text if that is a more convenient way to communicate. To text us, please send a message to 336-860-7646.
We want to connect with you more via social media. Let’s connect on LinkedIn, follow my channel on YouTube or follow my page on Facebook. We will be posting regularly on our blog as well, so be sure to check it out for personal financial advice, market insights and more.
If you have ever settled an estate for a loved one you know that it can be an excruciating process. We have a lot of experience in this area with a focus on communication and keeping the entire family updated. If you know of someone who is struggling to navigate an estate settlement we would love to help.
Here is a link to your online portal, click here.
We are taking the bus to pick apples this coming weekend with the entire office and their families. We are looking forward to enjoying the fall weather. If you want to request the bus as part of a non-profit auction or other philanthropic effort please reach out about it. The more creative the idea, the better in our opinion. You can email [email protected] or visit www.whythebus.com.
Fourth Quarter Outlook:
Politics, Putin and Powell are the three P’s that will define markets in the fourth quarter this year.
Politics are back and the mid-term election quickly approaching in November will give us a report card for the current administration. Over the past 22 mid-term elections, the President has averaged a loss of 28 seats in the House and 4 Senate seats. We expect to maintain a divided House and Senate at the end of this election. That is something the financial markets have seen as positive in the past. Remember, the markets do not like change.
Putin invaded the Ukraine on February 24th. With this campaign lasting over 7 months at this point and Putin announcing a draft, he has lost some support at home. Russians of draft age are fleeing the country in droves. While Putin has a very strong control over the country, these fissures in his control are a good sign. This conflict brings uncertainty to the financial markets with its threat to Europe and the impact on fuel prices.
Powell has a really tough job as he fights inflation. We do believe he has done the right thing in aggressively raising interest rates to combat inflation. Other countries are following suit in their own attempts to combat inflation. The other positive of all of these large moves is that the dollar is extremely strong. While that presents challenges for multinational companies it gives American consumers a lot more buying power.
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Planning tomorrow today.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays Capital U.S. Aggregate Bond Index, which used to be called the “Lehman Aggregate Bond Index,” is a broad base index, maintained by Barclays Capital, and is often used to represent investment grade bonds being traded in the U.S. Barclays Capital (BarCap) U.S. Aggregate Bond Index is made up of the Barclays Capital U.S. Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.