Market Commentary — September 12, 2022

Wall Street broke its losing streak last week as investors bet the market sell-off had bottomed after surrendering half its summer rally. Inflation fears are also moderating as oil prices declined—hitting their lowest level since Russia’s invasion of Ukraine—helping reset inflation expectations.

On the Fed front, Federal Reserve Vice Chair Lael Brainard and Cleveland Fed President Loretta Mester also delivered some more dovish comments. Brainard said she still believed the economy could avoid a recession even as the Fed raises rates.

The Fed’s “Beige Book” summarizing economic reports from its branch bank, reported that price increases were moderating in 9 of its 12 districts, as “lower fuel prices and cooling overall demand alleviated cost pressures, especially freight shipping rates.” The report also noted declines in prices for steel, lumber, and copper.

In a light week for economic data post-Labor Day, the Institute for Supply Management (ISM) and S&P released widely different readings on August service sector activity, with the ISM gauge upwardly revised to 56.9, the fastest pace of expansion since April, and the S&P measure falling more than expected, to 43.7, its biggest contraction since early 2020.

Meanwhile, the ECB followed the Fed’s lead, raising rates by 0.75%. Britain swore in a new Prime Minister who vowed to intervene to help reduce soaring energy costs. Separately, Finland, Sweden, Switzerland, and the UK pledged emergency liquidity support for electricity generators facing a potential cash flow crisis due to sharp increases in collateral required to hedge future production.

Hands down, the saddest news of the week was the passing of Queen Elizabeth II, England’s longest reigning monarch, who was beloved by her nation and whose presence will be missed around the world.

I found this quote which exemplifies her dedication to duty and service: “Each day is a new beginning, I know that the only way to live my life is to try to do what is right, to take the long view, to give of my best in all that the day brings, and to put my trust in God.”

Two days before her death, she swore in the new British PM Liz Truss, serving her country up until the very end. We can all learn and be inspired by her example of selfless dedication, integrity, and devotion to duty.

Looking forward to seeing many of you at FutureProof in Huntington Beach this week. I will be there with my flip flops on, ready to stroll the beach boardwalk.

Jane Edmondson
CEO and Co-Founder

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