Amidst signs of a cooling economy buoyed by waning inflationary pressures, a still-robust labor market continues to underpin the “no-landing” thesis. While third quarter corporate earnings reports would seem to suggest tepid revenue growth and a fair amount of margin pressure, equity markets remain fully valued. Also, bond yields have surged, accompanied by rising interest rate volatility. The market appears to have done the Fed’s job for it, and may lead to an extended pause by the FOMC.
On the labor front, the September JOLTS Job Openings report showed a higher than expected 9.55 million job vacancies, up from the prior month’s 9.49 million. This follows September’s jobs report indicating nonfarm payrolls expanded by a stronger than expected 336k. The Unemployment Rate held steady at 3.8%. Average Hourly Earnings rose by +0.2% MoM and +4.2% YoY. Continuing Claims for the week ending 10/26 came in at 1,790k, reaffirming an upward trend to the data.
As to the economy, Q3 GDP came in at a stronger than expected +4.9% YoY, with Personal Consumption up by 4.0%. With the U.S. consumer representing approximately 2/3 of the U.S. economy, we continue to think the odds for a hard landing remain slim as long as employment holds up.
The latest ISM Manufacturing reading for October came in below expectations at 46.7, suggesting a contraction in that area is under way. The ISM Employment reading fell below consensus at 46.8 while the ISM New Orders survey also missed the mark at 45.5. In contrast to manufacturing, the preliminary reading of the October S&P Global US Services PMI report came in at 50.9, suggesting a marginally expanding services sector.
Inflation remains sticky, although at a far lower level than a year ago. CPI for September rose +0.4% MoM (+4.1% YoY), while ex-food & energy, consumer inflation rose +0.3% MoM and +3.7% YoY. At the wholesale level, prices rose +0.5% MoM and +2.2% YoY. Stripping out the volatile food and energy sectors, prices rose +0.3% MoM and +2.7% YoY.
The Federal Reserve concluded its meeting as we go to press and they left short-term interest rates unchanged. As mentioned, the marketplace has seen bond yields rise by 100 basis points over the past couple of months, effectively doing the FOMC’s job for them. All eyes and ears will be on the language in the meeting statement, determining whether the Fed is done for good, or whether this is just a temporary pause in the upward trajectory of interest rates.
To read further about domestic and international equity, fixed-income, and alternative investments, please open the full paper below:
Nottingham Advisors offers both institutional and individual clients experience, sophistication, and professionalism when helping them achieve their goals. With over 40 years of serving Western New York and clients in more than 30 states, Nottingham tailors each solution to fit the specific needs of each client.
For more information about Nottingham’s offerings, visit www.nottinghamadvisors.com or call 716-633-3800.
Nottingham Advisors, LLC (“Nottingham”) is an SEC registered investment adviser located in Amherst, New York. Registration does not imply a certain level of skill or training. Nottingham and its representatives are in compliance with the current registration and notice filing requirements imposed upon SEC registered investment advisers by those states in which Nottingham maintains clients. Nottingham may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. For information pertaining to the registration status of Nottingham, please contact Nottingham or refer to the Investment Advisor Public Disclosure Website (www.adviserinfo.sec.gov). Any subsequent, direct communication by Nottingham with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.
This newsletter is limited to the dissemination of general information pertaining to Nottingham’s investment advisory services. As such nothing herein should be construed as the provision of personalized investment advice. The information contained herein is based upon certain assumptions, theories and principles that do not completely or accurately reflect your specific circumstances. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Adhering to the assumptions, theories and principles serving the basis for the information contained herein should not be interpreted to provide a guarantee of future performance or a guarantee of achieving overall financial objectives. As investment returns, inflation, taxes and other economic conditions vary, your actual results may vary significantly. Furthermore, this newsletter contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of their dates. As such, there is no guarantee that the views and opinions expressed in this article will come to pass. This newsletter should not be construed to limit or otherwise restrict Nottingham’s investment decisions.
This newsletter contains information derived from third party sources. Although we believe these third party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore. Some portions of this newsletter include the use of charts or graphs. These are intended as visual aids only, and in no way should any client or prospective client interpret these visual aids as a method by which investment decisions should be made. We have provided performance results of certain market indices for illustrative purposes only as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio. It should not be assumed that your account performance or the volatility of any securities held in your account will correspond directly to any benchmark index. A description of each index is available from us upon request.
Investing in the stock market involves gains and losses and may not be suitable for all investors. Past performance is no guarantee of future results.
For additional information about Nottingham, including fees and services, send for our Disclosure Brochure, Part 2A or Wrap Brochure, Part 2A Appendix 1 of our Form ADV using the contact information herein.