Archives: Insight

Weekly Market Insights – Monday, October 7, 2024

Market Ends the Week Flat Despite Friday Rally:

Stocks remained largely unchanged last week as geopolitical tensions introduced some volatility to an otherwise uneventful trading period.
The Dow Jones Industrial Average was flat (+0.09%), while the S&P 500 Index ticked up 0.22%. The Nasdaq Composite also was flat (+0.10%). The MSCI EAFE Index, which tracks developed overseas stock markets, was a bit more unsettled by the geopolitical events, dropping 3.74%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 8/23/24 = 0)

Stocks Flat, Oil Spikes

Stocks posted modest gains on Monday, encouraged by upbeat comments in a speech by Fed Chair Jerome Powell. However, the modest gains pushed the S&P 500 and Dow to fresh records.3
As Middle East tensions escalated on the first day of October, stocks fell, bond yields rose, and oil prices rose as the news unfolded.4
On Wednesday, all three averages were flat. An ADP report showed higher-than-expected private sector job growth—a metric investors focus on. Oil prices continued to rise as investors watched the developments in the Middle East.5,6
Then, on Friday, stocks rallied after the Labor Department’s September jobs report topped expectations.7

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Jobs Out Front

The Labor Department’s jobs report gave investors some much-welcomed insights into the jobs market. At its September meeting, the Fed indicated it was watching the jobs market as closely as inflation, so updates on the jobs market are now considered as important as inflation reports.8
The report showed employers added 254,000 jobs, about 100,000 more than economists expected. It also showed that unemployment ticked down to 4.1% last month.9

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, October 4, 2024
2Investing.com, October 4, 2024
3CNBC.com, September 30, 2024
4The Wall Street Journal, October 1, 2024
5The Wall Street Journal, October 2, 2024
6The Financial Times, October 3, 2024
7The Wall Street Journal, October 4, 2024
8The Wall Street Journal, October 2, 2024
9The Wall Street Journal, October 4, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

The First Cut Is the Deepest: How Long Can the Fed Rate Cutting Cycle Last?

By Gary Aiken | October 3, 2024

Cheryl Crow sang the title song for this month’s insight about a relationship gone wrong. In the lyrics, she desires to love again, but she knows it’s just not meant to be – the first cut is the deepest. Similarly, I think the Federal Reserve Chair Jerome Powell was singing his heart out at the press conference in September to convince markets that he would cut rates to stave off some unseen and, in our view, low probability recession. Deep down though, the bond market seems to suggest that significantly lower rates just aren’t necessary. The first cut may have been the deepest in a shallow rate-cutting cycle.
The Federal Reserve cut its benchmark rate, the Federal Funds Rate, by 50 basis points (0.5%) to kick off the first rate-cutting cycle in the post-pandemic era. Wall Street economists were split between whether the first cut should be 25 or 50 basis points, with most rather ambivalent. The important part was that the Fed needed to recognize the mounting disparity between the current inflation rate of 2.5% and the overnight policy rate of 5.3%. If allowed to go on for too long, tight monetary policy could certainly weigh on the economy. A cooling job market is evidence of the burden of tight monetary policy. Still, government spending propelled GDP estimates higher during the third quarter.
In January, I made a compelling (and correct) argument that the Federal Reserve and market participants have priced in an overly aggressive easing cycle. Federal Reserve Open Market Committee participants estimate where they expect future growth, inflation, and monetary policy to be in the near and distant future. An output called the “dot plot” shows each participant’s view of where they estimate the fed funds rate will be at different points in the future. September’s dots show an aggressive easing cycle again, and I find myself similarly contrarian.

The Fed’s Dot Plot Implies Significantly Lower Interest Rates

Source: Board of Governors of the Federal Reserve System (US); Bloomberg Finance, L.P.

There are several reasons why I think that future interest rate cuts may be less than expected. Instead of many 50 basis point cuts, the first cut may have been “the deepest,” and a shorter series of 25 basis point cuts may be the more likely path.
Inflation is slower to come down than expected. The chart below shows year-over-year inflation according to the Fed’s preferred measure, the Core Personal Consumption Expenditures Index (Core PCE). Economist John Silvia highlights that inflation is stabilizing above the Fed’s 2% target. Additionally, the University of Michigan survey reveals that participants anticipate long-term inflation to be around 3.1% over the next 5 to 10 years. This sentiment suggests that inflation expectations are becoming “unanchored” from the Fed’s target. Expectations often have a nasty way of turning into reality.

Inflation: Settling in Above Target

Source: John Silvia, Dynamic Economic Strategy; Bloomberg Finance, L.P.

Inflation expectations and actual inflation above the Fed’s target may curb the Fed’s desire to bring short-term and long-term interest rates down as much as predicted. I often cite a simple mathematical shorthand example. Let’s say we experience real 1 to 2% growth coupled with 2.5% to 3% inflation. That would give a range of 3.5% to 5.5% for the fed funds rate over the medium term. That range’s midpoint of 4.5% is far above the Fed’s 2.9% endpoint in the dot plot.
Despite a tighter job market, wages continue to rise. Unions have pressured managements to raise wages for contracts not negotiated since the great inflation. This presents a continued challenge to the assumption that wages and the prices of goods and services tied to those wages cannot rise faster. The presidential election may result in a tighter immigration policy, and even deportations could send away many job holders, reigniting wage pressure to find workers to perform those vacated jobs. The immigration during the Biden-Harris administration has put strains on parts of the economy but also alleviated worker shortages. Although quantifying the jobs created for temporary foreign workers in the United States has been difficult, wage inflation could return if their temporary status was overturned.
China exports inflation, not deflation this time. From its admittance to the World Trade Organization through the pandemic, China had been a cheap labor and goods supplier to the United States. They also exported deflation that offset some inflation in the United States, keeping our inflation rate at nearly 2% for two decades. The abundance of cheap labor and exported deflation is over. China’s wages are rising, and other countries – e.g., India, Vietnam, etc. – have been saturated by U.S. manufacturing. We may have reached the endpoint for offshoring labor’s deflationary exports. At the same time, China is embarking on an expansionary monetary policy of its own.

Chinese Stimulus Moves Commodity Prices Higher

Source: Bloomberg Finance, L.P.

China is printing Yuan to inflate its economy, which has been suffering from a real estate depression like our 2008-09 crisis. This time, though, if China is successful, it may inflate the prices of oil, copper, and iron ore, and export inflation to the United States. Cheap energy has been a great advantage for the United States, but rising oil and base metal prices could reverse the recent trends that have allowed the Fed to lower interest rates.
While the Federal Reserve may have intentions and forward guidance reasons for suggesting significant cuts, there is good reason to believe that the first cut was the deepest. There may be significant market headwinds to continuing declines in the inflation rate and, therefore, interest rates. Among these are skilled labor wages, immigration-related labor supply issues, and the importation of inflation from China. Still, the most optimistic scenario for the Fed not to lower interest rates as much as expected is my base case: the U.S. economy just doesn’t need significantly lower interest rates to keep growing.

Author

Gary Aiken, Chief Investment Officer

Gary Aiken is the Chief Investment Officer for Concord Asset Management and is responsible for macroeconomic analysis, asset allocation, and security selection, as well as trading and investment operations.

Gary has over 21 years of investment experience and holds an undergraduate degree in economics from the University of Maryland and an MBA from The George Washington University School of Business.

—

Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Concord Asset Management, or any non-investment related content, made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Concord Asset Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Concord Asset Management is neither a law firm, nor a certified public accounting firm, and no portion of this content should be construed as legal or accounting advice. A copy of Concord Asset Management’ current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/. Please Note: If you are a Concord Asset Management or Concord Wealth Partners client, please remember to contact the firm in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing, evaluating, and/or revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Concord Asset Management and Concord Wealth Partners shall continue to rely on the accuracy of information that you have provided. Please Note: If you are a Concord Asset Management or Concord Wealth Partners client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, September 30, 2024

Markets Maintain Momentum as D.C. Avoids a Shutdown:

Stocks notched more notable gains last week, building on the momentum generated following the Federal Reserve’s recent decision to cut short-term rates by 0.50%.
The S&P 500 Index gained 0.59%, while the Nasdaq Composite rose 0.95%. The Dow Jones Industrial Average added 0.62%. The MSCI EAFE Index, which tracks developed overseas stock markets, gained an eye-catching 3.53%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 8/16/24 = 0)

Congress Passes Spending Bill

Stocks started the week tepidly but in the green, as investors mostly shrugged off Tuesday’s weak consumer confidence report. Then, at midweek, markets put on the brakes as investors appeared to take profits after a four-day winning streak.3,4
On Thursday, markets rallied on news that the final Q2 gross domestic product estimate showed the economy increased at an annual rate of 3.0%. Then Friday, the PCE, or Personal Consumption and Expenditures Index, showed inflation had cooled slightly more than expected in August, which some believe may influence the Fed’s decisions on short-term rates at its November meeting.5
Finally, a continuing resolution was passed by both houses of Congress last week and signed by President Biden Friday morning, assuaging concerns over a government shutdown. The resolution funds the government until December 20.6,7

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

China’s Stimulus Package

This week, the head-turning performance came from outside the U.S. As measured by the MSCI EAFE (Europe, Australia, and Far East) Index, international stocks rose more than 3% following news of China’s stimulus package, which could be as much as 2 trillion yuan, or approximately $284 billion. China’s program also cut banks’ reserve requirements and lowered a key short-term interest rate.
While the EAFE Index doesn’t track stocks from Mainland China, the stimulus package had far-reaching implications for other countries.8,9

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, September 27, 2024
2Investing.com, September 27, 2024
3CNBC.com, September 24, 2024
4CNBC.com, September 25, 2024
5BEA.gov, September 26, 2024
6The Wall Street Journal, September 22, 2024
7The Hill, September 25, 2024
8The Wall Street Journal, September 27, 2024
9The Wall Street Journal, September 27, 2023

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, September 23, 2024

Fed Cuts Interest Rates by 0.5%:

Stocks moved higher last week following the Federal Reserve’s decision to cut its benchmark interest rate by 50 basis points on Wednesday—the first reduction in over four years. This action was reinforced by several data indicators that affirmed the Fed’s assessment of a cooling, yet resilient U.S. economy and decelerating inflation.
The S&P 500 Index gained 1.3%, while the Nasdaq Composite rose 1.4%. The Dow Jones Industrial Average moved ahead by 1.6%. The MSCI EAFE Index, which tracks developed overseas stock markets, inched up 0.4%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 8/9/24 = 0)

Investors React

Stocks traded in a narrow range for the first half of the week as anxious investors awaited the outcome of the Federal Open Market Committee’s (FOMC) September meeting.3,4
Shortly after 2PM ET Wednesday, the Fed announced it was cutting rates by a half percentage point—a more significant cut than some investors anticipated. Stocks initially rose in response and then fell again. Some market watchers attributed this decline to investors’ worries that the Fed might be concerned about economic growth.5,6
But after sleeping on it, stocks rallied Thursday, with the Nasdaq, S&P, and Dow climbing 2.5%, 1.7%, and 1.3%, respectively. The Dow topped 42,000 for the first time, while the S&P crossed the 5,700 mark.7,8

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

The Fed’s Approach

The half-point cut was the first change in the Fed Funds Rate in 14 months and the first reduction in 4½ years, bringing its target range to 4.75-5.0%. Fed Chair Powell said the decision reflected the Committee’s “greater confidence that inflation is moving sustainably toward 2%” and that the “risks to achieving its employment and inflation goals are roughly in balance.”9

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, September 20, 2024
2Investing.com, September 20, 2024
3CNBC.com, September 16, 2024
4The Wall Street Journal, September 18, 2024
5CNBC.com, September 18, 2024
6The Wall Street Journal, September 18, 2024
7The Wall Street Journal, September 19, 2024
8The Wall Street Journal, September 20, 2024
9The Wall Street Journal, September 18, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, September 16, 2024

Stocks Bounce Back Ahead of Fed’s September Meeting:

Markets rallied last week as investors reacted positively to better-than-expected consumer and producer inflation data. This suggested that inflationary pressures may be easing, leading to renewed optimism as investors eagerly await the Fed’s next rate decision.
The Dow Jones Industrial Average rose 2.60%, while the S&P 500 Index gained 4.02%. The Nasdaq Composite led, picking up 5.95% as tech stocks rebounded. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.01%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 8/1/24 = 0)

A Wednesday to Remember

Stocks fluctuated out of the gate to start the week as “risk on” investors made moves before the pending release of the twin inflation reports–the Consumer Price Index (CPI) and Producer Price Index (PPI). The three major averages finished slightly more than 1% higher in Monday trading.3
On Wednesday, stocks initially dipped following the release of the CPI as traders appeared disappointed by the report. By midday, that sentiment changed. The S&P 500, down as much as 1.6% in early trading, gained 1.1% by the closing bell. More inflation data out Thursday showed wholesale price increases were tempered, which helped stocks move higher through the balance of the week.4,5

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Small Caps Shine

Small-cap stocks, as measured by the Russell 2000 Index, have pushed higher in recent weeks, which is a telling move for some Wall Street observers. The Russell 2000 has outperformed the S&P 500 by more than 4% during Q3 so far.6
One reason is that smaller stocks tend to respond when they anticipate interest rates will trend lower. Investors appear to be positioning themselves in small cap issues, expecting the Fed may adjust rates at its September meeting as it attempts to guide the economy to a soft landing.7

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, September 13, 2024
2Investing.com, September 13, 2024
3The Wall Street Journal, September 10, 2024
4The Wall Street Journal, September 11, 2024
5CNBC.com, September 12, 2024
6The Wall Street Journal, September 13, 2024
7MarketWatch.com, September 12, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, September 9, 2024

All Eyes on the Fed as Economic Data Shakes Up Markets:

Stocks fell last week as disappointing economic data reignited recession concerns among investors as they closely monitor the Federal Reserve’s next move regarding interest rates.
The Dow Jones Industrial Average lost 2.93%, while the S&P 500 Index dropped 4.25%. The tech-heavy Nasdaq Composite fell 5.77%. The MSCI EAFE Index, which tracks developed overseas stock markets, declined 2.91%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 07/26/24 = 0)

Economic Data Unsettles Investors

The four-day trading week got off to a rough start as weak manufacturing data reawakened recessionary fears. All three major averages were down for the first session after the Labor Day holiday. For many, it was reminiscent of August 5th, when stocks tumbled as recession worries unsettled investors.3
Attention shifted to Friday’s jobs report as stocks traded narrowly. Markets initially reacted positively to news that job growth rebounded slightly and unemployment ticked down. However, selling pressure increased as the trading session progressed and investors digested the underlying data. The S&P 500 had its worst week since March 2023.4

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Anticipating the Fed’s September Meeting

The Federal Reserve seems poised to make a tough decision regarding monetary policy in its September meeting. The jobs market and other softening economic data have quickly overshadowed concerns about inflation. However, there’s still a case to be made for a soft landing.
Job growth in August was slower than expected, but 142,000 jobs were created–an uptick that some would argue is an overall positive despite missing expectations. The drop in the unemployment rate to 4.2% bolstered the soft-landing narrative.5
Market observers anticipate a 0.25% rate adjustment in September, but some contend that the Fed may consider a more significant move. On Friday, Fed Governor Christopher Waller said he was open to a larger move if necessary. Chicago Fed President Austan Goolsbee and New York Fed President John Williams commented similarly during the week.6,7

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, September 6, 2024
2Investing.com, August 30, 2024
3The Wall Street Journal, September 3, 2024
4The Wall Street Journal, September 6, 2024
5The Wall Street Journal, September 6, 2024
6Marketwatch.com, September 5, 2024
7CNBC.com, September 6, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

What Comes Next? Understanding the Fed’s Focus on Full Employment

By Gary Aiken | September 5, 2024

My family and I finally caught Hamilton on Broadway this weekend, ticking off a plan we had back in 2020 before the pandemic hit. The pandemic shutdown not only interrupted our lives but kicked off an unprecedented economic policy response. The Federal government approved trillions of dollars of stimulus which the Federal Reserve funded through a rapid increase in money supply. Predictably, this resulted in historic inflation. To unwind the inflation it created, the Fed raised interest rates to decrease the money supply, slowing the pace of inflation and the overheated economy. Here we are in 2024 having come full circle. The economic lows and highs of the pandemic seem to be fading away and we finally completed our family trek to Broadway. While I watched King George III’s character in the musical sing after the American Revolution, I too wondered as an investor, “What comes next?”
Chairman of the Federal Reserve, Jerome Powell, gave us some indication of what comes next regarding monetary policy. Following a rise in the unemployment rate and significant revisions to payroll numbers, the Fed will be increasingly focused on the “full employment” part of its mandate. We should expect lower short-term interest rates soon, but a rising unemployment rate is often a lagging signal that the recession is here. How fearful should investors be that our 20% probability recession call needs to rise? Let’s count the ways.
First, monetary policy has been restrictive for a long period. The Fed may be further behind the curve than recognized. A central bank policy mistake is one of the main historical reasons we have had recessions. Second, the Sahm rule was breached. Economist Claudia Sahm proposed this “rule” that implores the government to do something to prevent an economy from going into recession around the time that the three-month average unemployment rate has risen by half a percentage point or more. Third, the yield curve has been significantly inverted for some time (long-term rates lower than short-term rates discourage investment for the future and slow current economic growth). The inversion is almost cured and, in the past, the resolution of the yield curve inversion to a more normal shape (upward sloping) has indicated that the recession is nigh. Fourth, company earnings were quite good for the second quarter, but there were signs that segments of the American consumer are almost tapped out and significant signs that companies no longer possess their pandemic pricing power.  Finally, let’s return to where we started. Unemployment is a lagging indicator – by the time unemployment rises significantly, it’s too late for policymakers to do much to prevent the recession.
Now that we are sufficiently depressed let’s take a step back. The U.S. economy is still in decent shape. Talking with other Chief Investment Officers, it seems like many of us (who have to actually buy and sell securities for clients) are focused on one statistic in particular. The chart below shows U.S. Continuing Jobless Claims. Continuing claims indicate that a person actively went to a state unemployment agency and filed to receive unemployment compensation for at least two weeks in a row. Taking the pandemic out of the picture, we see that about 2 million Americans were in this transient state between jobs for the five years or so before the pandemic. For the past two and a half years, the average has been about 1.7 million Americans filing continuing claims, and today, that number is approximately 1.9 million – still below the pre-pandemic average.

U.S. Continuing Jobless Claims Below Pre-Pandemic Average

Source: Bloomberg Finance, L.P.

You may have seen news that the Bureau of Labor Statistics revised the number of jobs created in the United States downward by 818,000 jobs for the prior year. The reasons for this large negative revision are many. Analysis shows the main culprits are the treatment of “undocumented” workers in the official numbers and that survey-based measures’ reliability in general have become increasingly fraught as individuals and businesses give up phone landlines. Initial and continuing jobless claims don’t use assumptions – workers who have been laid off or fired must contact their state unemployment offices to get a check. Money talks, and this gives confidence in that statistic above others.
In our view, “what comes next” is an environment where companies can take advantage of lower interest rates for the first time in two years. The economy is already on solid footing, and companies’ earnings have been good. According to FactSet, through mid-August, 93% of S&P 500 companies had reported earnings; of those, 79% had earnings that exceeded Wall Street estimates, and 60% had revenues that exceeded estimates. Earnings for the second quarter grew 10.9% compared to the same period a year ago. As we said in our Halftime Report, any recession (albeit a low probability) is likely to be short and shallow, and if the stock market declines, retreating prices would present a chance to buy great companies at good prices.

Lower Interest Rates Rationalize Current Price-to-Earnings Ratios

Source: Bloomberg Finance, L.P.

In 1989, Warren Buffett wrote, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” On average, U.S. stocks seem mostly wonderful and priced fairly for now. Stock buyers today are not coming in at terrific bargains. Price-to-earnings ratios are higher today than in the past three years. Companies may justify those price multiples because managements deliver significant value to shareholders. Further, lower interest rates will bring opportunities to grow through acquisition and debt refinance, and future profits will have higher present values. Periodic declines in stock prices are regular occurrences for stock investors, but amidst a growing U.S. economy, stocks present good relative value for patient investors.

Author

Gary Aiken, Chief Investment Officer

Gary Aiken is the Chief Investment Officer for Concord Asset Management and is responsible for macroeconomic analysis, asset allocation, and security selection, as well as trading and investment operations.

Gary has over 21 years of investment experience and holds an undergraduate degree in economics from the University of Maryland and an MBA from The George Washington University School of Business.

—

Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Concord Asset Management, or any non-investment related content, made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Concord Asset Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Concord Asset Management is neither a law firm, nor a certified public accounting firm, and no portion of this content should be construed as legal or accounting advice. A copy of Concord Asset Management’ current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/. Please Note: If you are a Concord Asset Management or Concord Wealth Partners client, please remember to contact the firm in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing, evaluating, and/or revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Concord Asset Management and Concord Wealth Partners shall continue to rely on the accuracy of information that you have provided. Please Note: If you are a Concord Asset Management or Concord Wealth Partners client, please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Tuesday, September 3, 2024

Markets React to Key Economic and Earnings Reports:

Last week saw mixed results for stocks, driven by a combination of upbeat economic data and the release of a critical Q2 corporate earnings report ahead of the Labor Day weekend.
The Dow Jones Industrial Average rose 0.94%, while the S&P 500 Index increased 0.24%. The Nasdaq Composite lagged, falling 0.92%. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 0.35%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 08/5/24 = 0)

Key Economic Data

Markets began the week quiet as investors awaited Q2 earnings from Nvidia, the world’s most influential name in artificial intelligence.
The chipmaker–the second largest stock in the S&P 500 by market capitalization–dipped on the news, putting pressure on the Nasdaq and S&P 500. (The Nasdaq and S&P 500 are market-weighted averages, so larger companies have an outsized impact.)3
Nvidia is mentioned to show its influence on the overall stock market. It should not be considered a solicitation for the purchase or sale of the company.
On Thursday, an upward revision in Gross Domestic Product (GDP) data boosted markets, although stocks fell later in the day. Friday’s Personal Consumption and Expenditures (PCE) data seemed to confirm that inflation remained tame, welcome news for investors who are anticipating the Fed may adjust rates in September.4

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Softer Landing in Focus?

Several pieces of data helped build a narrative that the economy may be coming in for a soft landing.
Second-quarter GDP growth was revised upward, from 2.8% to 3.0%. That’s an improvement from Q1 GDP, which rose 1.4%. Some market watchers were concerned about the Q2 revision after pending home sales in July hit its lowest monthly level in 23 years.5
Meanwhile, the Federal Reserve’s preferred measure of inflation, the PCE Index, came in 0.2% higher in July – in line with expectations. Core PCE inflation, which the Fed tracks closely, edged up 0.2% – also in line with forecasts.6

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, August 30, 2024
2Investing.com, August 30, 2024
3The Wall Street Journal, August 28, 2024
4The Wall Street Journal, August 30, 2024
5The Wall Street Journal, August 29, 2024
6CNBC.com, August 30, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, August 26, 2024

Market Rally Continues as the Fed Signals It’s Time for Rate Cuts:

Stocks saw more notable gains last week as encouraging remarks from the Federal Reserve supported the market’s rebound from early August lows.
The S&P 500 Index rose 1.45%, while the Nasdaq Composite added 1.40%. The Dow Jones Industrial Average picked up 1.27%. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 2.98%.1,2

Source: Bloomberg Finance, L.P. (Performance data normalized 07/26/24 = 0)

Dovish Week

Stocks started the week strong, rallying after Wall Street welcomed dovish comments from Minneapolis Fed President Neel Kashkari. The S&P 500 and Nasdaq each posted gains on Monday — the 8th consecutive winning session. The Dow rose for the 5th session in a row.3,4
From there, markets traded in a narrow band until Wednesday afternoon when minutes released from the July 30-31 FOMC Meeting revealed more dovish comments. On Thursday, stocks dipped ahead of Fed Chair Jerome Powell’s annual Jackson Hole, Wyoming, speech.5,6
Well-received comments from Powell on Friday boosted markets, with all three averages closing higher.7

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

“The Time Has Come”

The Fed’s annual symposium for global central bankers started Friday morning with Fed Chair Powell’s much-anticipated speech. Citing the risk of the labor market cooling even further, he said, “the time has come for policy to adjust.”
Investors responded favorably, with the remaining question being how significant a rate cut might be. Powell kept that door open, adding that “the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”8

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, August 23, 2024
2Investing.com, August 23, 2024
3The Wall Street Journal, August 23, 2024
4The Wall Street Journal, August 19, 2024
5MarketWatch.com, August 22, 2024
6Reuters.com, August 22, 2024
7The Wall Street Journal, August 23, 2024
8The Wall Street Journal, August 23, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Weekly Market Insights – Monday, August 19, 2024

Stocks Rally on New Economic Data and Fed Optimism:

Stocks notched more solid gains last week, driven by encouraging economic data and constructive comments from Fed officials about inflation and interest rates.
The S&P 500 Index rose 3.93%, while the Nasdaq Composite gained 5.29%. The Dow Jones Industrial Average lagged a bit, picking up 2.94%. The MSCI EAFE Index, which tracks developed overseas stock markets, powered ahead by 4.31%.1,2

Source: Charles Schwab

Upbeat Economic News

Three critical economic data points gave investors what they were looking for: wholesale inflation, consumer prices, and retail sales.
Both the Producer Price Index and the Consumer Price Index rose less than expected in July, reinforcing a picture of cooling inflation. The July retail sales report on Thursday was stronger than expected, which added more fuel to the week-long rally.3,4,5
Market action slowed down on the week’s final trading day, with positive consumer sentiment gains countered only by a drop in housing starts.
It was the S&P 500’s best weekly gain of the year so far and the best since November 2023. The gains helped erase losses from earlier in the month, when “carry trades” news from Japan unsettled investors.6,7

Sources: U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Charles Schwab

Double Assist

Last week’s market rally was bolstered by positive economic data and dovish comments from the Federal Reserve about cooling inflation and the likelihood of an interest rate cut in the coming months.
On Thursday, Atlanta Fed President Raphael Bostic said he had “a lot more confidence that inflation’s sustainably on its way to 2%,” citing steady drops in CPI, while St. Louis Fed President Alberto Musalem said, “the time may be nearing when an adjustment (to the Fed Funds Rate) may be appropriate.8

This Week: Key Economic Data

Source: Bloomberg Finance L.P.

This Week: Companies Reporting Earnings

Source: EarningsWhispers

Author

Gary Aiken
Chief Investment Officer
Concord Asset Management
—

Footnotes and Sources

1The Wall Street Journal, August 16, 2024
2Investing.com, August 16, 2024
3The Wall Street Journal, August 13, 2024
4The Wall Street Journal, August 14, 2024
5The Wall Street Journal, August 15, 2024
6The Wall Street Journal, August 16, 2024
7CNBC.com, August 16, 2024
8The Wall Street Journal, August 15, 2024

The companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks, including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications, and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

Concord Asset Management, LLC (“CAM”) is a registered investment advisor with the Securities and Exchange Commission. CAM is affiliated, and shares advisory personnel with Concord Wealth Partners (“CWP”). CAM offers advisory services, including customized sub-advisory solutions, to other registered investment advisers and/or institutional managers, including its affiliate, Concord Wealth Partners, LLC. CAM’s investment advisory services are only offered to current or prospective clients where CAM and its investment adviser representatives are properly licensed or exempt from licensure.

The information provided in this commentary is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CAM or its affiliates, or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from CAM or CWP. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. CAM and CWP are neither law firms nor certified public accounting firms, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of CAM’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https://concordassetmgmt.com/

Please Note: If you are a CAM or CWP client, please remember to contact us, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CAM and CWP shall continue to rely on the accuracy of the information that you have provided. Please Note: If you are a CAM or CWP client, strong>please advise us if you have not been receiving account statements (at least quarterly) from the account custodian.