September 13, 2024

The Broadcast | August & September 2024

Photo by Nandita Damaraju on Unsplash

As you have likely noticed, this newsletter seems to be arriving in your inbox later and later each month. When I first created The Broadcast, I did so with three goals: keeping you informed, maintaining regular contact and sharing interesting financial insights from around the industry. I hope you have found these missives to be informative and even occasionally humorous (either because of/or in spite of my regular pop culture analogies, sports references and personal anecdotes.)

The original plan was to send these posts out at the beginning of each month, which for various reasons has not been the case of late. Part of the reason for my tardiness is writer's block. As a non-professional writer, trying to creatively write about the financial and economic highlights each month has proven to be tougher than I imagined. (Hard to believe I aspired to be a writer in high school.) There are only so many ways I can dress up corporate earnings or reference the Terminator when talking about AI.

Looking back at my inaugural post from December 2021, the first item I wrote about was...drumroll please...yes, you guessed it - inflation! Inflation has been the topic du jour for nearly 3 years! No wonder I feel like a broken record trying to reinvent the proverbial wheel each and every month.

Last month's Broadcast focused on the sharp (if brief) market pullback that occurred in early August and it's potential causes. As you may recall, I pointed out that the economy was seemingly in good shape and that the pullback may have been spooked by an increase in unemployment and a warning signal that the increase caused (the Sahm rule.)

So what happened?

August 2024 Index Returns

As you can see in the chart above, despite a volatile first week - all of the major indices ended in positive territory for the month!

Ok, great...right? Umm, not so fast. Let's take look at what's happened in September thus far:

September 2024 MTD Returns

Is this August all over again? Like the late great Yankee Catcher Yogi Berra once said, "I feel like it's Deja Vu all over again."

August's inflation numbers were released yesterday and (as has been the case for sometime) we got (mostly) good news. The Consumer Price Index came in at 2.5% which is its lowest reading since February 2021!

But amidst the (seemingly) good news, housing costs were higher than expected. This is leading investors to believe that while the Fed may finally lower short term interest rates, it may only lower them by -0.25% instead of -0.50%.

As you may recall, investors love free (or at least cheaper) money - such as we had from late 2008 to early 2022 when interest rates were effectively zero. Most of the conventional wisdom last year was that the Fed would lower rates several time and several percentage points this year. It's no surprise then, that many investors are bummed out that the allure of cheaper money hasn't and probably won't fully materialize this year.

While investors aren't as happy with rates as they had hoped, it really hasn't impacted the stock market over the course of the year with each major index firmly in the positive.

2024 YTD Major Index Returns

My biggest takeaway from the results above are that our economy is resilient and that despite a myriad of challenges our economy as a whole is healthy and growing.

As we close the third quarter in a few weeks, all eyes continue to be on inflation, interest rates and employment. Next, we will get a look at corporate earnings beginning in October which again, will shed some light on the strength of our economy

As for the newsletter itself, my new plan is to send out a mid-month update. With any luck, this will help alleviate my writer's block and will also give me the opportunity to incorporate timely financial data (i.e. inflation, unemployment, etc.) into the narrative instead of leaving you with a cliff-hanger every month. And who knows, maybe I'll be back to my old tricks and even mention the 49ers next time.

Until then, please take good care and let me know if you have any questions.

Have a great weekend!

Steve