ECONOMIC REVIEW1

  • The Job Openings and Labor Turnover Survey (JOLTS) for the month of October was higher than the expectation among economists. The actual number of openings was 11.033 million compared to the expectation of 10.438 million openings.
  • The Consumer Price Index (CPI) for the month of November increased by 0.8% compared to the survey estimate among economists of 0.7%.
  • The University of Michigan Consumer Sentiment Index increased to 70.4 from 67.4, which was higher than the expectation of 68.

INSIGHT: The sharp increase in job openings continue to highlight the ongoing struggle that employers are facing in trying to match workers with vast number of openings. On a more positive note, the quits rate did decline for the first time since May of this year. The quits rate came down from previous all-time high of 3% to settle at 2.8%. While this number is still elevated, it does indicate that employers have had more success at retaining human capital. Inflation once again rose to record levels in November, accelerating to its fastest pace since 1982. However, what seemed to calm investors was that most of the gains were attributed to the more volatile food and energy prices. The Labor Department stated that this 12-month increase for food and energy was the fastest in the last 13 years. With evidence of persistent inflation moving forward, markets seem to expect the Fed to double its current pace of bond tapering. The Fed previously reduced its bond buying by $15 billion a month and could potentially reduce their pace of buying further to $30 billion a month. 

A LOOK FORWARD1

  • The Producer Price Index (PPI) for the month of November will be announced on Tuesday, the survey estimate is a 0.5% increase on a month-over-month basis.
  • Retail sales for the month of November will be released on Wednesday, the expectation among economist’s is for retail sales to increase by 0.8% on a month-over-month basis.
  • Housing Starts for the month of November will be announced on Thursday, the survey estimate is expecting starts to increase by 3.2% on a month-over-month basis

INSIGHT: Fresh off another sharp increase in consumer prices, it would be no surprise to see the input prices for producers increase as well. Supply constraints continue to plague most firms and especially those who are without strong pricing power. With Black Friday not too far behind us, retail sales data looks to continue to be strong. However, this Black Friday marked the first time ever that growth slowed on a trailing year. According to data from Adobe Analytics, online sales were $8.9 billion for 2021 compared to $9 billion for the trailing year. This does not come as a surprise, as over the last few months’ supply issues caused consumers to start their shopping earlier due to the possibility that their goods may not make it in time for the holidays. According to a survey from the National Retail Federation, 61% of consumers had already started purchasing holiday gifts before Thanksgiving. Although sales on Black Friday were lower, the expectation is that holiday spending for the whole season will eclipse last year’s amount. 
OBSERVATIONS

  • U.S. equities moved higher this week as indicated by the S&P 500 which was up +3.85% on the week.
  • In the U.S., smaller sized companies underperformed their larger-sized counterparts, as the Russell 2000 index increased by +2.45% on the week.
  • International stocks as measured by the MSCI EAFE were positive on the week, up +2.44%, underperforming domestic stocks.
  • Emerging market stocks were positive on the week with the MSCI EM up +1.15%.
  • U.S. investment grade bonds were negative last week with the Bloomberg Barclays U.S. Aggregate Bond index down -0.72%.

BY THE NUMBERS

TWENTY OR MORE – The S&P 500 is up +27.2% YTD (total return) through last Friday 12/10/21. The S&P 500 has returned at least +20% (total return) in 11 of the last 30 years (1991-2020). The S&P 500 consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).

VERY LATE IN THE YEAR AGAIN – The all-time closing high for the S&P 500 of 4712 was set on 12/10/21. The S&P 500 has set its closing high for the calendar year during December in 13 of the last 19 years, i.e., 2003-2021, including December highs reached in 2019, 2020 and now 2021 (source: BTN Research).

ONE-PER CENT - To rank in the top 1% of US taxpayers for the 2019 tax year required adjusted gross income (AGI) of at least $546,434. That highly paid group received 20.14% of all AGI that was reported nationwide but they paid 38.77% of the federal income tax that was collected (source: Internal Revenue Service).

IMPACTING MANY - 45% of American households surveyed in November 2021 indicate that rising domestic inflation has caused them “moderate” or “severe” hardship (source: Gallup).

Reprinted with permission from BTN. Copyright © 2021 Michael A. Higley.
    Matthew J. Lawler, Financial Advisor
Securities offered through Securities America, Inc. Member FINRA/SIPC Advisory Services offered through Securities America Advisors, Inc. Matthew J. Lawler Representative  F&M Wealth Management and F&M Bank are not affiliated with the Securities America Companies May Lose Value - Not FDIC-Insured - No Bank Guarantee - Not a Deposit - Not Insured by any Government Agency
Economic Definitions

Job Openings – JOLTS: This concept tracks the number of specific job openings in an economy. Job vacancies generally include either newly created or unoccupied positions (or those that are about to become vacant) where an employer is taking specific actions to fill these positions.

CPI (headline and core): Consumer prices (CPI) are a measure of prices paid by consumers for a market basket of consumer goods and services. The yearly (or monthly) growth rates represent the inflation rate.

University of Michigan Consumer Sentiment Index: Consumer confidence tracks sentiment among households or consumers. The results are based on surveys conducted among a random sample of households. Target Audience: representative sample of US households (excluding Alaska and Hawaii). Surveys of Consumers collects data on consumer attitudes and expectations summarized in the Consumer Sentiment, to determine the changes in consumers' willingness to buy and to predict their subsequent discretionary expenditures. This Index is comprised of measures of attitudes toward personal finances, general business conditions, and market conditions or prices. Components of the Index of Consumer Sentiment are included in the Leading Indicator Composite Index. Unit: Index (Q1 1966=100)

Producer Prices - PPI (headline and core): Producer prices (output) are a measure of the change in the price of goods as they leave their place of production (i.e. prices received by domestic producers for their outputs either on the domestic or foreign market).

Retail Sales: Retail sales (also referred to as retail trade) tracks the resale of new and used goods to the general public, for personal or household consumption. This concept is based on the value of goods sold.

Housing Starts: Housing (or building) starts track the number of new housing units (or buildings) that have been started during the reference period. 

Index Definitions

S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

NASDAQ: The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Russell Mid-Cap: Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index.

Russell 2000: The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization. The real-time value is calculated with a base value of 135.00 as of December 31, 1986. The end-of-day value is calculated with a base value of 100.00 as of December 29, 1978.

MSCI EAFE: The MSCI EAFE Index is a free-float weighted equity index. The index was developed with a base value of 100 as of December 31, 1969. The MSCI EAFE region covers DM countries in Europe, Australasia, Israel, and the Far East.

MSCI EM: The MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

Bloomberg Barclays US Agg Bond: The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate pass-throughs), ABS and CMBS (agency and non-agency).

Bloomberg Barclays High Yield Corp: The Bloomberg Barclays US Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.

Bloomberg Barclays Global Agg: The Bloomberg Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers. 
Disclosures

Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect again loss. In general, the bond market is volatile; bond prices rise when interest rates fall and vice versa. This effect is usually pronounced for longer-term securities. Any fixed-income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Vehicles that invest in lower-rated debt securities (commonly referred to as junk bonds or high-yield bonds) involve additional risks because of the lower credit quality of the securities in the portfolio. International investing involves special risks not present with U.S. investments due to factors such as increased volatility, currency fluctuation, and differences in auditing and other financial standards. These risks can be accentuated in emerging markets.

The statements provided herein are based solely on the opinions of the Ladenburg Thalmann Asset Management (Ladenburg) Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions.

Certain information may be based on information received from sources the Ladenburg Research Team considers reliable; however, the accuracy and completeness of such information cannot be guaranteed. Certain statements contained herein may constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein reflect the judgment of the Ladenburg Research Team only as of the date of this document and are subject to change without notice. Ladenburg has no obligation to provide updates or changes to these opinions, projections, forecasts and forward-looking statements. Ladenburg is not soliciting or recommending any action based on any information in this document.

Ladenburg is a SEC Registered Investment Adviser under the Investment Advisers Act. Ladenburg provides investment advisory services and may serve as a sub-adviser for accounts managed by third-party advisers or may be included in advisory platforms sponsored or administered by affiliates or third parties. Ladenburg does not provide tax or legal advice. Please consult your tax advisor or attorney. For additional information, please see the Program Disclosure Brochure or ADV Part II for full details, which are available upon request or please visit adviserinfo.sec.gov. 3964633 
1Data Obtained from Bloomberg as of 12/10/2021