The Pine Tree, News for Calaveras County and Beyond Weather
Amador Angels Camp Arnold Bear Valley Copperopolis Murphys San Andreas Valley Springs Moke Hill/West Point Tuolumne
Business Directory
Weather & Roads
Real Estate
Weekly & Grocery Ads
Life & Style
Law Enforcement
Wine News
Health & Fitness
Home & Garden
Food & Dining
Religion & Faith
Frogtown USA
Free Classifieds
Letters to the Editor
About Us

Log In


Remember Me

Posted by: thepinetree on 12/06/2022 06:17 PM Updated by: thepinetree on 12/06/2022 06:18 PM
Expires: 01/01/2027 12:00 AM

Strong Economic Data Creates Fed Uncertainty ~ Sabrina Julian Investment Services

Murphys, CA...In their latest commentary, the Cetera Investment Management Team discusses what is weighing on investors’ minds during this most recent market selloff. The Fed has entered a blackout period leading up to their meeting next week, so investors are left digesting better than expected economic data that could cause the Fed to be more aggressive.

Sabrina Julian
(209) 890-7491
Sabrina Julian Investment Services

Strong Economic Data Creates Fed Uncertainty
• With Fed officials in a blackout period, investors have switched their focus.
• A strong payroll and service sector report may cause a more aggressive Fed.
• Volatility will remain through this Fed rate hike cycle.

After declining 1.79% on Monday, the S&P 500 fell another 1.44% on Tuesday. Prior to this week, investors had been focused on what Fed officials had been saying. Officials had given investors optimism that Fed Fund rate hikes would slow from the current 0.75% meeting pace and eventually stop around a level close to 5% sometime next year. However, with the Federal Open Market Committee (FOMC) meeting next week, Fed officials entered a blackout period this past weekend, leaving investors to find something else to focus on.

On Monday, investors were given some good economic data when the Institute for Supply Management’s Purchasing Manufacturers Index (PMI) Services was released. We like this index because it is forward-looking and one of the first economic indicators released during the month. This index is based on data compiled from purchasing and supply executives nationwide and gives us an early indication of what business leaders are thinking in the services industry. The November reading surpassed expectations and, instead of falling closer to contraction, it rose more into expansion. While good news for the economy, it doesn’t fit with the Fed’s objectives of slowing inflation.

Adding to investors angst, investors had brushed off a strong payroll report on Friday. Nonfarm payrolls grew by over 263,000, when many had expected the number to drop to around 200,000. So, while the manufacturing PMI has finally entered contraction, the service sector is doing well, and the labor market remains strong. This gives the Fed more room to raise rates, which thus increases the chance of recession and ultimately lower corporate earnings.

We expect more volatility leading up to next week. Next Tuesday we get more inflation data in the Consumer Price Index and the FOMC meeting concludes next Wednesday when they release a statement and Fed Chair Powell gives his press conference. We will also get the long-awaited Fed Dot Plot update which will show us where FOMC members see the Fed Funds Rate peaking.

Another tailwind perhaps is related to market technicals. The S&P 500’s big decline on Monday pushed the index below its 200-day moving average, after it had closed above this level for three straight days. Prior to last week, the S&P 500 traded below its 200-day moving average since April. While there is concern that the Fed’s aggressive polices have not made their mark on the economy quite yet, some investors may be simply profit taking after the markets sharp rebound recently.

As we continue through this Fed rate hike cycle, we expect volatility to remain. The Fed will not make policy decisions on a single data point, but investors will continue to price assets accordingly as data is released. Ultimately, the Fed needs confidence that inflation is under control. Stronger economic data could mean a more aggressive Fed, which increases the risk of a recession and lowers corporate earnings. The good news is that markets are forward looking and will eventually start to price in economic recovery, though timing is the big question.

While the employment and ISM services reports make the Fed’s job more difficult, this doesn’t change our thesis. If we have a recession, it may be a mild one due to labor strength and a resilient service sector. As is the case now, not all parts of the economy will have a recession at the same time – manufacturing and housing are weak and the service economy is still expanding.

As we go through this rate hike cycle, please continue to work with your financial professional to make sure you are properly diversified to help mitigate market volatility and your portfolio is aligned with your long-term investment objectives.
This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA 92101.

Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

The material contained in this document was authored by and is the property of Cetera Investment Management LLC. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Your registered representative or investment adviser representative is not registered with Cetera Investment Management and did not take part in the creation of this material. He or she may not be able to offer Cetera Investment Management portfolio management services.

Nothing in this presentation should be construed as offering or disseminating specific investment, tax, or legal advice to any individual without the benefit of direct and specific consultation with an investment adviser representative authorized to offer Cetera Investment Management services. Information contained herein shall not constitute an offer or a solicitation of any services. Past performance is not a guarantee of future results.

For more information about Cetera Investment Management, please reference the Cetera Investment Management LLC Form ADV disclosure brochure and the disclosure brochure for the registered investment adviser your adviser is registered with. Please consult with your adviser for his or her specific firm registrations and programs available.
No independent analysis has been performed and the material should not be construed as investment advice.

Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. The market indices discussed are not actively managed. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

What's Related
These might interest you as well

phpws Business Directory

Photo Albums

Local News

Mark Twain Medical Center
Meadowmont Pharmacy
Angels & San Andreas Memorial Chapels
Bear Valley Real Estate
Gerard Insurance
Bank of Stockton
Fox Security
Bistro Espresso
Chatom Winery
Middleton's Furniture
Bear Valley Mountain Resort
Cave, Mine & Zip Lines
High Country Spa & Stove
Ebbetts Pass Scenic Byway
Sierra Logging Museum Calaveras Mentoriing
Jenny's Kitchen

Copyright © The Pine Tree 2005-2023