Weekly Newsletter

Portfolio Advisory Council, LLC presents:

April 17, 2023

THE WEEKLY ECONOMIC

UPDATE

Don't forget to come by and visit us at

Keels & Wheels Concours D'Elegance on May 6th or 7th. Call us for details.

Abraham Lincoln signed the Revenue Act in 1861, which imposed the first-ever federal income tax. To drum up funds for the Civil War, Lincoln and Congress enacted a modest 3 percent tax on income over $800, which would be roughly $23,000 today. The law was almost instantly replaced with a new revenue act and would be repealed a decade later, but the relief obviously didn’t last: In 1913, the 16th Amendment established the federal income tax system we all know today.

QUOTE OF THE WEEK

"The art of taxation consists of plucking the goose so as to get the most feathers with the least hissing."

~ King Louis XIV of France

The combination of an improving inflation outlook resulted in a week of uneven, albeit positive, performance, in which cyclical and financial stocks rallied while technology, real estate, and utilities lagged.

The Dow Jones Industrial Average gained 1.20%, while the Standard & Poor’s 500 rose 0.79%. The Nasdaq Composite index increased 0.29% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 2.08%.^1,2,3

Inflation Retreat

Stocks treaded water ahead of last week’s inflation data and the start of a new earnings season. Stocks rallied on a favorable March consumer inflation report, only to falter after the release of last month’s Federal Open Market Committee (FOMC) meeting minutes, which hinted at a potential recession later this year.

After reports of a more pronounced slowdown in producer prices on Thursday, stocks surged higher, with technology and communication services companies leading the charge. A weak retail sales number on Friday shaved the gains to close out the week.

Trending Lower

Last week provided fresh insight into inflation, and the news was encouraging.

The Consumer Price Index (CPI) rose a very modest 0.1% in March, while the year-over-year increase in consumer prices was 5.0%, down from February’s 12-month rise of 6.0%. Declines aided the March report in groceries, gasoline, medical care, and utilities.⁴

The read on supplier prices was even more positive. The Producer Price Index (PPI), which many economists see as a signal of future consumer prices, declined 0.5%–the most significant monthly decline since 2020. The 12-month increase as of March was 2.7%, an easing from February’s year-over-year climb of 4.9%.⁵

This Week: Key Economic Data

Tuesday: Housing Starts.

Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.

Friday: Purchasing Managers’ Index (PMI) Composite Flash.

^{Source: Econoday, April 14, 2023}

^{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.}

This Week: Companies Reporting Earnings

Monday: The Charles Schwab Corporation (SCHW), M&T Bank Corporation (MTB).

Tuesday: Netflix, Inc. (NFLX), Bank of America Corporation (BAC), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), The Goldman Sachs Group, Inc. (GS) .

Wednesday: Tesla, Inc. (TSLA), IBM Corporation (IBM), Lam Research Corporation (LRCX), Abbott Laboratories (ABT), Morgan Stanley (MS), U.S. Bancorp (USB), United Airlines Holdings, Inc. (UAL).

Thursday: AT&T, Inc. (T), Blackstone, Inc. (BX), American Express Company (AXP), CSX Corporation (CSX), Union Pacific Corporation (UNP), D.R. Horton (DHI), Truist Financial Corporation (TFC).

Friday: The Procter & Gamble Company (PG), HCA Healthcare, Inc. (HCA), Freeport-McMoRan, Inc. (FCX), Regions FInancial Corporation (RF).

^{Source: Zacks, April 14, 2023}

^{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.}

WEEKLY RIDDLE

Two fathers and two sons shopped for computers at their local big box retailer. Each bought a PC, yet they purchased only three PCs in total. How could this be?

Last week’s riddle: I can’t walk, but at times I run, and I am challenging to hide. I am always with you. What am I? Answer: Your nose.

Portfolio Advisory Council, LLC

A Registered Investment Advisory Since 1986

Investment advisory services offered through Portfolio Advisory Council, LLC, and an SEC Registered Investment Adviser.

We cannot accept trade orders through e-mail. Important letters, e-mail, or fax messages should be confirmed by calling 713.574.6015. This email service may not be monitored every day, or after normal business hours.

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, April 14, 2023}

^{2. The Wall Street Journal, April 14, 2023}

^{3. The Wall Street Journal, April 14, 2023}

^{4. The Wall Street Journal, April 12, 2023}

^{5. The Wall Street Journal, April 13, 2023}

^{6. IRS.gov, August 8, 2022}

^{7. Medical News Today, March 21, 2023}