Time to Pivot Investments Yet?

What a year!

In just the last 34 days the stock market has risen 12%. But the 56 days prior to that the market dropped 16%. And the 60 days prior to that the market rose 17%. For the entire year so far, the market, as measured by the S&P 500 stock index, is still down 16%. In previous dispatches, we have said that stock markets will probably not turn around – pivot – until the Federal Reserve or inflation shows signs of turning around. During the last month we have had such two small indications. The most recent Consumer Price Index report showed that inflation was slowing down – a hair. Today, the Producer Price Index, that is, the prices received by mostly manufactures, also showed an indication that inflation may have peaked. These two measurements have spurred market activity. Perhaps ironically, the recent midterm elections have had negligible impact.

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Time to buy CDs?

With the recent increase in interest rates by the Federal Reserve, bank CD rates have risen dramatically.  CDs just a few months ago offering less than 1% rates are now offering as much as 4% per year.

Strangely enough, because of the action by the Fed and its effect on short-term rates, a five and even 10-year term CD is paying approximately the same as a 1-year CD:  about 4%.  Therefore, we get no higher rate for locking in our money for 10 years vs. just one year.

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Dougherty Dispatch - Inflation Up - Stocks Down

Today, inflation data came out this morning and it was a bit higher than “experts” anticipated.  They were expecting prices to hike 8.0% over last year (12 months ago), but they came in at 8.3%.  Prices compared to last month were up 0.1%. Economists were expecting a drop of 0.1%.  This increase happened despite a dropping price for gasoline last month.

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Dougherty Dispatch—Is it a Recession or Not?

Dear (Confused?) Client:

So much to say, so difficult to figure out. This week has been a big week in economic and
financial reporting. Big companies have been reporting recent profits; the Federal Reserve has
announced a 0.75% hike in their interest rate to fight inflation; the government reported how
much our economy grew or didn’t (it shrank a hair). What does it all mean for our investment
assets?

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Dougherty Dispatch—Blood on the Street

Dear Besieged Client,

Today the financial markets dropped the most since June 2020, the dark days of Covid.  Please refrain, however, from kicking your dog or jumping out of planes without a parachute.

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