Hazy Summer and Future for Stocks |Business Briefing

Hazy Future: It will come as no surprise that we, along with everyone else, cannot predict the future. When it comes to the economy and stocks, it’d be pretty amazing if we could, not to mention rather lucrative. And it’s wise to be wary of people with too much certainty about the future. The year has been about inflation, interest rates, and geopolitical tensions. Increased inflation killed stocks, and increased interest rates beat up bonds badly. Consumer prices have continued to increase.

To help alleviate the pressure of rising prices, the Fed has raised rates four times, with more hikes to come in the fall. And that destroyed consumer confidence. The stock market has been all over the place; banks kicked off earnings season with high confidence in consumer credit—but told investors to be ready for a slowdown. Travel companies told investors there was no sign of a slowdown. So, what are we to think? Who do we listen to? And the real question is whether inflation has peaked. Overall numbers haven’t budged, but commodities (like gas) are coming down. And (thankfully) stocks have stopped going lower (see chart). But the question remains whether we’ve hit ‘the bottom’ or just ‘a bottom.’ The best way forward? Stick to your overall investment philosophy, fine-tune it with your advisor and focus on what you can control.

Battling Inflation: According to the New York Federal Reserve this past week, Americans’ attempts to keep up with inflation has resulted in larger credit card debt. U.S. household debt rose above $16 trillion for the first time during the second quarter, and credit card balances jumped $46 billion, even as interest rates rose. Credit card debt has increased by $100 billion, or 13 percent, in the last year, the biggest proportional increase in more than two decades. The New York Fed says people are adding to their credit card balances to keep up with inflation. While credit cards have their place, this isn’t an approach we would generally advocate. Reach out to your advisor today to strategize personal ways to keep up with inflation.

Business Briefing

• Weekly Jobless Claims: This last week saw the number of Americans applying for jobless benefits rising to 260,000 from 254,000 the previous week, the Labor Department reported. The four-week average, which evens out fluctuations and gives a more accurate picture of layoffs, climbed to 254,750. While the total number of people collecting unemployment benefits rose, that number remains at a 50-year low, signaling continued strength in the labor market. (The Associated Press)
• Stocks Fall Flat: U.S. stock futures were nearly flat early Friday ahead of the Labor Department’s July jobs report. “Investors will be waiting to see if the labor market can withstand the Fed’s rate-hike campaign as well as it did in June,” said Mike Loewengart, managing director of investment strategy at E-Trade. (CNBC)
• Mortgage Rates Drop: Mortgage rates dropped this past week, with the 30-year fixed-rate mortgage falling below 5 percent for the first time since mid-April. The rate for the popular mortgage was 4.99%, according to Freddie Mac. Rates have risen significantly, hitting 5.81% in mid-June, as the Federal Reserve aggressively raised its benchmark rates to cool the economy and bring down the highest inflation in 40 years. The Fed doesn’t set mortgage rates, but its policies indirectly affect borrowing costs for consumers. (CNN)

Surprise!: Belle, a Doberman and cattlehound mix, was born with a rather distinct feature that stretches her muscles to the back of her head. The result? She looks wide-eyed and surprised all the time. This feels like a very appropriate look for the last couple of years on planet Earth.