Author: Ryan Frydenlund

Ryan Frydenlund

Financial News and Portfolio Management Discussion through October 16th

Stocks surged over the week on better than expected earnings to kick of third quarter earnings season with the largest banks posting strong gains. The S&P 500 climbed 1.8% and the Dow jumped 1.6% for the week. Abroad, the FTSE All World Ex US was gained 2.3% for the week. The yield on the 10-year Treasury declined for the first time in eight weeks to end the week at 1.57% down from 1.60%. Oil continued to surge to finish the week at $82.28, its highest level since 2014.

The CPI rose 0.4% from August and is up 5.4% over the year, slightly higher levels than projected.

The Fed’s meeting minutes from their September meeting showed that it was prepared to begin curtailing its bond buying program in November with a potential end mid next year. They also could raise interest rates late next year.

US jobless weekly jobless claims fell below 300,000 to 293,000, its lowest level since the pandemic began.

Retail sales rose 0.7% in September, when a decline was expected.

Financial News and Portfolio Management Discussion through October 9th

Stocks gained over the week on an increase to the debt ceiling until early December avoiding a potential default. The S&P 500 rose 0.8% and the Dow gained 1.2% for the week. Abroad, the FTSE All World Ex US was up 0.6% for the week. The yield on the 10-year Treasury posted its seventh straight week of gains to end the week at 1.60% up from 1.48%. It’s at its highest level since late June. Oil surged over the week gaining 4.6% on low supply to finish the week at $79.35 a barrel, its highest level since 2014.

The US saw its slowest pace of monthly job gains this year in September with just 194,000 jobs added. However, August’s hiring was revised higher. More job seekers exited the labor pool last month so despite the weak higher level the unemployment rate dropped to 4.8%. Wages rose 4.6% from a year earlier.

Initial jobless claims fell for the first time in four weeks.

OPEC+ agreed to continue to increase oil production in gradual steps and not accelerate production as many had expected.

September Market Commentary

Market Commentary

US stocks pulled back to end the third quarter over a bevy of concerns to post the worst monthly performance since March 2020. Worries over the Delta variant, global growth, reduced central bank support, a stalemate in Congress, and China’s real estate market all weighed on stock values. Economic news was mixed over the month pointing towards slower growth. While manufacturing increased, retail sales rose 0.7%, and durable goods orders were stronger than expected, job growth disappointed in August with only 235,000 hires, less than half of what was expected. The unemployment rate still fell to a new pandemic era low of 5.2% from 5.4%. The Fed reported a softening in economic activity in July through August, consumer sentiment ticked down, and business activity cooled. The CPI rose 0.3% in August compared to July, lower than projected and down from the pace of recent months. On an annual basis, inflation is up 5.3%. Oil surged over the month climbing 9.5% to end at $75.03 a barrel, its highest level since 2014, as supply remains limited.

Foreign stocks fell in September due to many of the same issues seen in the US. At the conclusion of its meeting, the European Central Bank said it would keep monetary policy loose for some time, but would conduct bond purchases at a “moderately lower pace” over the next three months to reflect improving prospects for the eurozone. China’s manufacturing activity contracted in September for the first time since the start of the pandemic, while some growth was still expected. In addition, several economic indicators slowed sharply in August. Retail sales grew 2.5%, significantly short of expectations, home sales fell and construction starts declined. China Evergrande Group, China’s second largest real estate developer, was on the precipice of failure due to being over levered and drove concerns of a worldwide crisis, shaking stock markets. Emerging markets trailed developed markets over the month, quarter, and year to date.

Bonds fell in September as the Fed announced it was planning to begin to reduce support for the economy. The Fed signaled after its September meeting it was likely to begin cutting back on its bond purchase program in November. They expect a gradual reduction in bond purchases that ends by mid 2022. In addition, they could raise the Fed Funds Rate as soon as next year with rate increases faster and more pronounced than they were projecting earlier this year. Fed Chair Powell said the recent increase in inflation might last longer than the Fed initially anticipated. The 10-year Treasury yield continued to climb in September to finish the month at 1.52%, up from 1.31% at the end of August and at its highest level since June. Agency bonds were the top sector for the month and quarter, while Muni and credit bonds led the way for the year to date. Shorter term bonds topped longer term bonds in September, over the third quarter, and for the year to date.

Index PerformanceSeptember3QYear to DateTrl. 12 Months
US Stocks (Russell 3000)-4.49%-0.10%14.99%31.88%
Foreign Stocks (FTSE AW ex US)-3.04%-2.62%6.72%25.06%
US Bond Mkt. (BBgBarc Int. Gov/Cred)-0.57%0.02%-0.87%-0.40%
Municipal Bonds (BBgBarc 1-10 Yr Muni)-0.46%0.01%0.33%1.15%
Cash (ICE BofA ML 3-Mo T-Bill)0.01%0.01%0.04%0.07%

Financial News and Portfolio Management Discussion through October 2nd

Stocks declined over the week on worries over inflation and economic growth. The S&P 500 fell 2.2% and the Dow dropped 1.4% for the week. Abroad, the FTSE All World Ex US sank 2.5% for the week. The yield on the 10-year Treasury continued its recent climb to end the week at 1.48% up from 1.46%. It’s at its highest level since late June.

China’s central bank announced that all cryptocurrency transactions are illegal dealing a blow to the virtual currencies.

US durable goods orders rose 1.8% in August stronger than expected.

Home price growth rose an annual record 19.7% in July according to the Case-Shiller Home price index.

China’s manufacturing activity contracted in September for the first time since the star of the pandemic, while some growth was still expected.

In comments Fed Chair Powell said the recent increase in inflation might last longer than the Fed initially anticipated.

Financial News and Portfolio Management Discussion through September 25th

Stocks dropped early in the week over concerns on Chinese real estate developer China Evergrande’s potential failure, but rallied later in the week as investors believe the fallout would be contained and a positive Fed meeting. The S&P 500 rose 0.5% and the Dow gained 0.6% for the week. Abroad, the FTSE All World Ex US fell 0.5% for the week. The yield on the 10-year Treasury climbed over the week to end at 1.46% from 1.37% as the Fed announced it was moving to reduce support for the economy. It’s at its highest level since July.

The Fed signaled after its September meeting it was likely to begin cutting back on its bond purchase program in November. They expect a gradual reduction in bond purchases that ends by mid 2022. In addition, they could raise the Fed Funds Rate as soon as next year with rate increases faster and more pronounced than they were projecting earlier this year.

Business activity showed signs of slowing in the US and Eurozone in September based on surveys.

China’s central bank announced that all cryptocurrency transactions are illegal dealing a blow to the virtual currencies.