Headlines that reinforced a slower growth environment were persistent last week, but just as persistent — or resilient we should say — was the stock market. It did not let the growth worries get it down. In fact, the markets traded through the growth worries to a winning week that was looking a lot better before Snap (SNAP) went crackle & pop in the wake of its Q2 earnings report. Before the Snap news after Thursday’s close, the S&P 500 was up 3.5% for the week. It would eventually close the week with 2.5%. Overall, it was a good week despite Friday’s pullback – but not a good week for the economic outlook. (ummmm, I don’t understand???)
The market is fighting the Fed on one front, earnings (company projected profits) on another, and supply on yet another. Specifically, existing home sales were weaker than expected in June and declined for the fifth straight month. Initial jobless claims topped 250,000 for the first time since mid-November 2021. Apple (AAPL), Alphabet’s Google (GOOG), Microsoft (MSFT), and Snap (SNAP) all reported that they plan to slow their hiring activity. On the fixed income (for those of you on a fixed income) the yield/return on a 2-yr note fell to 2.99% and the 10-yr note fell to 2.78%. This is a concern because it is seen by some as a harbinger of a possible recession. However, the good news is that the stock market behaved as if the bad economic news was not a surprise. It overshadowed the poor economic data making the focal point for a contrarian-minded to buy the dip mentality – at least for the short term. However, we all know that this can be short-lived. Aside from that, Wall Street Portfolio Managers revealed the lowest equity allocation since the Lehman Bros. crisis and the highest cash level since 2001.
With clear signs of slower growth and falling long-term rates, it continues to strengthen our view of proper allocation and the importance to implement and FOLLOW a Financial Plan for both your household and your business. In doing so, you can save upwards of 35% in household/business expenses. Our view is that you can continue to grow your income and net worth through effective planning. Give us a call and we can show you how.