Restored into Fall

Last week saw markets shifting into month’s end, as a traditionally calm August came to a close. As economic data brought forth increased hopes of a soft landing, we saw markets rally with the S&P 500 up 2.50%, the Dow Jones up 1.09%, and the NASDAQ leaping 3.25%. Bonds also rallied, with the Agg up 0.18%. Alternatives were mixed, with Bitcoin futures down -0.9%, gold up 1.34%, silver up 2.39%, and oil up 4.76%.

Last week saw the printers abuzz with a slew of economic reports pushing markets. JOLTS Job Openings came in sharply under expectations last Tuesday at 8,827K, a 651K shortfall against expectations. This was joined by a weaker-than-expected consumer confidence report at 106.1 vs estimates of 116.0. Wednesday brought Q2 GDP second preliminary results in with a downward revision, as Seasonally Adjusted Year over Year (SA Y/Y) estimates came down to 2.5% vs 2.6%. Pending home sales saw a bounce versus expectations and over last month, with July numbers at +.90%. Thursday ended the month on Personal Consumption Expenditure prints. Both the Core PCE Deflator and PCE Deflator (Core excludes food and energy) came in near expectations. September then opened with unemployment numbers exceeding estimates and payrolls coming in above expectations. The somewhat conflicting reports may be attributed to the bankruptcy of Yellow Trucking which contributed to a surge in unemployment.

For this (shortened) week, economic reports resume with durable good orders and factory inventories, as well as trade balances and productivity numbers. Friday will cap the week with wholesale inventory data and consumer credit.

This earnings season, one headwind we anticipate working against retailers is the prevalence of shrinkage or shrink. “Shrink” is the difference between the goods a company pays for and the goods that are sold.  The difference could be due to losses stemming from employee theft, consumer theft, damages, fraud, errors, or other factors. The pressures of higher shrink were particularly noted by Dollar General (DG), recently. In general, businesses report that the shift to self-checkouts have coincided with higher shrink, whether from theft, mis-scanning, or other causes. We see increased shrink as a threat to retailer margins and profitability and one they will need to focus on going forward to control this cost of business, if they are to deliver results for shareholders.

In geo-political events, the war in Ukraine continues, with Ukrainian forces launching drone attacks against Russia’s Kursk region and Russia claiming to have deployed their Sarmat ICBM missile following an unsuccessful test in April 2022. The United States saw Hurricane Idalia hit parts of the east coast and leave damages in Florida’s Big Bend area and Paris instituted an interesting ban on self-service electric scooters after five years marred by reckless use, injuries, and even a few deaths.

With most schools back in session and families getting “back to business,” now is a great time to reflect on the role children play in the future. For many, the first thing that comes to mind is higher education, and recent law changes created even more flexibility for the popular 529 savings plans.  In addition to paying for private primary education, college, and trade school, those who do not use all (or any) of the funds set aside in a 529 account may roll up to $35,000 (when certain conditions are met like the account being open 15 years) into a Roth IRA as a head start of retirement savings. Proverbs 21:1 cautions: “Do not boast about tomorrow, for you do not know what a day may bring forth.” Building a solid portfolio inside of a 529 can help families be prepared for what the coming days may bring forth, while also multiplying talents for use in the future. Reach out to us to learn more about incorporating 529 accounts to help the children in your life Dream More. Plan More. Do More.

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