Market Commentary — September 6, 2022

Stocks finished lower heading into the Labor Day weekend, as investors were still trying to digest the implications of the Fed’s hawkish tone coming out of Jackson Hole. The S&P 500 extended the losing streak that started with Jerome Powell’s speech on August 26th.

Powell made it clear at Jackson Hole that fighting inflation is the Fed’s top priority and that even if some “pain” is required, the central bank would continue raising interest rates and shrinking its balance sheet “for some time.”

Value stocks continued to outpace high-valuation growth stocks, and large-caps held off better than their small-cap peers. Energy shares declined as oil prices fell to below $90 per barrel for West Texas Intermediate (WTI) crude.

Friday’s jobs report showed the economy added 315k jobs in August, down from 526k in July and unemployment rose slightly from 3.5% to 3.7%. Evidence of continued strength in the labor market pushed U.S. Treasury yields higher, with the two-year Treasury yield hitting a high of 3.516%, a level not seen since November of 2007. A stronger-than-expected Institute for Supply Management (ISM) manufacturing number, also helped move yields higher, with the 10-year closing the week around 3.2%.

Other Fed officials reiterated Powell’s hawkish message last week, saying there is no gain without pain when bringing down inflation. Minneapolis Fed President Neel Kashkari was happy with the market’s sell-off reaction. I am sure if he was still head of equities at PIMCO, he would feel otherwise.

There is a new mystery player in ETF land. The Tema ETF trust filed for 7 interesting thematic ETFs last week, but more intriguing was their slew of 65 single stock ETF filings on Friday under the UnoShares name. Tema may have been trying to fly under the radar during a slow week leading into the Labor Day weekend, but we see you Tema!

Hope everyone had a wonderful, relaxing Labor Day to give them strength as we close out the remainder of 2022. Hope to see some of you at FutureProof in Huntington Beach, California in a couple of weeks. I am thinking business on the top, and flip-flops for the feet.

Jane Edmondson
CEO and Co-Founder

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