9/26: Weekly Economic Update from PMG Wealth Mgmt.

September 26, 2022

THE WEEK ON WALL STREET

Last week, Fed Chair Powell said the U.S. would not tame inflation without economic pain. This week heightened recession fears and sent stocks broadly lower.

The Dow Jones Industrial Average dropped 4.00%, while the Standard & Poor’s 500 lost 4.65%. The Nasdaq Composite index fell 5.07% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 3.05%.^1,2,3

YIELDS SURGE, STOCKS STUMBLE

Last week’s meeting of the Federal Open Market Committee (FOMC) proved unsettling for the financial markets. It wasn’t only the widely expected announcement of another rate hike but a more hawkish message that rates may be heading higher for longer than anticipated. Fed officials indicated that any policy change might be further off than investors had contemplated.

The latest rate hike caused bond yields to rise, with two-year and ten-year Treasury note yields touching levels not seen in over a decade. Global central banks moved in tandem with the Fed, as the Bank of England, Swiss National Bank, and Norway’s Norges Bank, among others, also hiked rates.^4,5

ANOTHER RATE HIKE

In its effort to cool inflationary forces, the Federal Reserve raised interest rates by 0.75% last week - the third consecutive rate increase of that size. Projections by FOMC members suggested that interest rates may increase by as much as 1.25 percentage points before before year-end.⁶

The FOMC also projects that unemployment will rise to 4.4% by December 2023. This projection is up from its current level of 3.7%, and that core inflation will be 4.5% by year-end. In June, Fed officials projected core inflation would be at 4.3% by year-end. They also indicated that interest rates may reach as high as 4.6% in 2023, without any rate cut likely until 2024.⁷

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Durable Goods Orders. Consumer Confidence. New Home Sales.

Thursday: Jobless Claims. Gross Domestic Product (GDP).

Friday: Consumer Sentiment.

Source: Econoday, September 23, 2022

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

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THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: Cintas Corporation (CTAS), Paychex, Inc. (PAYX).

Thursday: Micron Technology, Inc. (MU), Nike, Inc. (NKE).

Source: Zacks, September 23, 2022

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Phil Guerrero, CFP®

President

Wealth Advisor

phil@pmgwealth.com

George Maroudas

Wealth Advisor

george@pmgwealth.com

Terry Maziarka

Client Service Manager

terry@pmgwealth.com

847.550.6100

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WEEKLY QUOTE

"People are like stained-glass windows. They sparkle and shine when the sun is out, but when the darkness sets in, their true beauty is revealed only if there is a light from within."

Dr. Elisabeth Kubler-Ross

WEEKLY TIP

Never leave money on the table when it comes to your workplace retirement accounts. If your employer offers to match contributions, strive to contribute enough so that you get the match.

WEEKLY RIDDLE

Alexandra's mom had four children. The first one was named May, the second was named June, and the third was named August. What was the fourth child's name?

LAST WEEK'S RIDDLE

We all have one, and even though it often demands an answer, it offers no question. What is this everyday item?

ANSWER: A phone.

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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.

All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.

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CITATIONS:

1. The Wall Street Journal, September 23, 2022

2. The Wall Street Journal, September 23, 2022

3. The Wall Street Journal, September 23, 2022

4. The Wall Street Journal, September 22, 2022

5. CNBC, September 22, 2022

6. The Wall Street Journal, September 21, 2022

7. CNBC, September 21, 2022