Weekly Market Update September 20, 2023

The price of oil quietly eclipsed $90 per barrel last week for the first time since last November. As a result, energy prices have been driving inflation modestly higher as August's Consumer Price Index (CPI) rose at an annual rate of 3.7% in August and 0.6% on a month-to-month basis, the fastest pace since mid-2022. Excluding volatile energy and food prices, core inflation rose at a more modest 0.3% on a month-to-month basis. 

The Federal Reserve is widely expected to keep rates unchanged after their two-day meeting this week that ends on Wednesday. The current target fed funds rate is set at a range between 5.25% and 5.50%. While the Fed is likely to pause, the European union's inflation battle rages on after the European Central Bank lifted interest rates for the tenth consecutive policy meeting, bringing key rates to their highest level since 1999. 

Stock market volatility has remained muted in recent weeks, with large-cap stocks holding onto their 2023 lead relative to smaller-cap peers. The S&P 500 Index has returned 17.4% in 2023, while small cap stocks have returned just 6.1% and micro cap stocks have lost 2.3%. 

This week, we hear from Jerome Powell and the Federal Reserve for the next FOMC interest rate decision, with markets predicting rates will remain unchanged. Additionally, we check in on the real estate market with housing starts and building permits on Tuesday and existing home sales on Thursday. 

Blueprint Numbers

RECORD STRIKES ACROSS U.S. - The Hollywood writers and actors strike kicked off a rising trend of striking workers in the U.S. The Screen Actors Guild currently has 160,000 striking members, while the Writers Guild of America has 11,500. Combined with the recent United Auto Worker's 12,700 striking works and the Labor Department estimates that 4.1 million days of work have been lost to work stoppages this year. (Source: The Wall Street Journal) 

COUNTRY BY COUNTRY - Which country-specific ETFs have performed best this year? Argentina (34.7%), Greece (32.5%) and Nigeria (29.8%) round out the top three, while Hong Kong (-15.2%), Pakistan (-12.6%) and Thailand (-9.6%) have generated the worst returns in 2023. (Source: Creative Planning)

FED PAUSES, STILL TIGHTENING - Even though the Federal Reserve has paused their interest rates hikes, they are quietly still implementing fiscal tightening by reducing their balance sheet. The Fed's bond holdings have declined by approximately $1 trillion since the peak in April 2022, which brings the Fed balance sheet down to 31% of gross domestic product (GDP) from 37.5%. (Source: Schwab).

BITCOIN ETF? - A district court ruled in favor of Grayscale, who currently operates the largest Bitcoin publicly traded trust (GBTC) at $16 billion in AUM, that the SEC unfairly rejected their proposal to create the first Bitcoin ETF. Now, Grayscale and traditional finance competitors such as Blackrock and Franklin Templeton are racing to file the first official Bitcoin ETF. (Source: Forbes)

The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

 Stock investing includes risks, including fluctuating prices and loss of principal. 

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