Weekly Newsletter

Portfolio Advisory Council, LLC presents:

July 11, 2022

THE WEEKLY ECONOMIC

UPDATE

THIS WEEK IN HISTORY

July 11, 1804, in one of the most famous duels in American history, Vice President Aaron Burr fatally shoots his long-time political antagonist Alexander Hamilton. Alexander Hamilton fought in the American Revolutionary War, helped draft the Constitution, and served as the first secretary of treasury. He was the founder and chief architect of the American financial system.

QUOTE OF THE WEEK

"Go fast enough to get there, but slow enough to see."

~ JIMMY BUFFETT

THE WEEK ON WALL STREET

In a holiday-shortened trading week, stocks rallied despite mixed economic data and vacillating energy prices and bond yields.

The Dow Jones Industrial Average increased 0.77%, while the Standard & Poor’s 500 rose 1.94%. The Nasdaq Composite index picked up 4.56% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.46% higher.^1,2,3

STOCKS MOVE HIGHER

In advance of Friday’s much-anticipated employment report, stocks enjoyed successive daily gains despite ongoing concerns about a recession. Recession fears were supported by an inversion in the yield curve and updated second-quarter Gross Domestic Product projections indicating the economy is ready to contract.

Technology shares were the week’s big winners as investors appear to have turned to companies with earnings growth potential during a weakening economic environment. Stocks bounced along the flatline following the strong jobs report on Friday to close out a positive week.

EMPLOYMENT’S MIXED SIGNAL

One of the holes in the "imminent-recession" narrative has been the labor market's strength. Historically, recessions have been preceded by or concurrently with a weakening jobs market.

Friday's employment report reflected a job market that continues to belie Wall Street's recession fears. Employers added 372,000 jobs in June, a number that was above economists' estimates of 250,000. Wage gains were robust (+5.1% year-over-year), though still below the inflation rate. The unemployment rate was unchanged at 3.6%.⁴

BY THE NUMBER$

DOUBLE-DOUBLE - The size of the US economy was $718 billion as of 3/31/1965, doubled over the next 9 years to $1.5 trillion as of 3/31/1974, doubled over the next 7 years to $3.1 trillion as of 3/31/1981, doubled over the next 10 years to $6.0 trillion as of 3/31/1991, doubled over the next 11 years to $11.9 trillion as of 3/31/2002 and over the next 20 years to $24.4 trillion as of 3/31/2022 (source: Department of Commerce).

RISING COST OF MONEY - The yield on the 10-year Treasury note nearly doubled YTD after the first 6 months of 2022, rising from 1.496% as of the close of trading on 12/31/2021 to 2.973% as of the close of trading on Thursday 6/30/2022. Over the last 60 years (1962-2021), the yield on the 10-year note has never doubled over the course of an entire calendar year (source: Treasury Department). 5

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: Consumer Price Index (CPI).

Thursday: Producer Price Index (PPI). Jobless Claims.

Friday: Retail Sales. Industrial Production. Consumer Sentiment.

Source: Econoday, July 8, 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.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: Delta Air Lines, Inc. (DAL).

Thursday: JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Conagra Brands (CAG).

Friday: UnitedHealth Group (UNH), Citigroup, Inc. (C), Wells Fargo & Company (WFC), BlackRock, Inc. (BLK), U.S. Bancorp (USB), The PNC Financial Services Group, Inc. (PNC).

Source: Zacks, July 8, 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.

THE WEEKLY RIDDLE

Two in every corner, one in every room, none in a house. What is it?

LAST WEEK’S RIDDLE: It weighs nothing, but when you put it into any container it makes the container lighter. What is it?

ANSWER: A hole.

Portfolio Advisory Council, LLC

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James W. Hamilton, CFS, AIF

713.574.6025

W. Thomas Sutton CFP(R), ChFC, CLU

713.574.6020

Philip B. Moran, MBA, ChFC, CFP(R), AIF

713.574.6030

John C. Husbands

Visit us at www.pac1000.com

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.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

CITATIONS:

1. The Wall Street Journal, July 8, 2022

2. The Wall Street Journal, July 8, 2022

3. The Wall Street Journal, July 8, 2022

4. CNBC, July 8, 2022