Market Commentary — September 19, 2022

Thanks to a hotter-than-expected consumer price index (CPI) inflation print of 8.3%, stocks suffered their largest weekly drop in 3 months. The report dimmed investor hopes that the economy had moved beyond “peak inflation”. Even more concerning was that core inflation (ex food and energy) jumped to 6.3%, its highest level since March.

A 0.7% rise in housing costs in August was partially to blame, syncing with higher mortgage rates. On a more positive note, core producer prices, reported Wednesday, offered a somewhat more hopeful story, continuing a year-over-year decline that began in April, falling to 7.3% in August from 7.6% in July.

But what about jobs? Media reports suggest that Goldman Sachs is about to cut 2% of its workforce, joining a growing list of companies like Ford and Microsoft planning layoffs. And FedEx says it is gearing up for a global recession. But weekly jobless claims, reported Thursday, painted a different picture, falling to 213,000, their lowest level since early summer.

And then there were retail sales. The Labor Department reported that a 4.2% decline in spending at gas stations in August helped foster spending gains on cars, “miscellaneous stores,” and restaurants and bars. Falling gas prices also helped boost the University of Michigan’s consumer sentiment reading for September which hit a five-month high, while five-year inflation expectations in the survey fell to 2.8%, the lowest in over a year.

US Treasury yields continue to push higher on the short-end of the curve, with the 2-year treasury yielding around 3.9%, its highest level in nearly 15 years, widening the 2-10 year yield curve inversion to -41 bps. While the majority of market participants still expect the Fed to hike rates by 75 bps next week, fed fund futures are now pricing in a 16% chance of a 100 bps increase according to the CME Fedwatch Tool.

First off, Advisor Circle’s FutureProof Wealth Festival in Huntington Beach was a huge success and the site has already been secured for next September. The immersive, outdoor beachside concert stage experience was well received, far-trumping windowless conference rooms full of suits. You know that they have made finance cool when you run into your restaurant waiter from the night before. I also cannot say enough about the diverse representation at the event, which was both refreshing and inspiring. The future potential for our industry is so bright, you gotta wear shades.

In ETF news, two new ETFs filed with tickers NANC and KRUZ aimed at tracking their stock purchases. The Unusual Whales Subversive Democratic Trading ETF (ticker NANC) and the Unusual Whales Subversive Republican Trading ETF (KRUZ) will analyze the financial disclosure of lawmakers from both parties and their spouses and dependent children to construct a portfolio of between 500 and 600 holdings, according to a regulatory filing Thursday. And when a position is reported as sold, the ETFs will offload the security as well. And Strive Asset Management rolled out its second “antiwoke” ETF the Strive 500 ETF (STRV).

The Ethereum Merge is complete. You can read my article “Blockchain 101- Why is the Merge Causing Ethereum to Surge?” right here! It may represent a small victory in the battle of woke versus unwoke, but Ether’s price fell on the news.

Jane Edmondson
CEO and Co-Founder

About

EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.

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