Fallout From Powell Comments Continues

September 26, 2022

Share |

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 Tumble

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 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

This Week: 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.}}

This Week: 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.}}

A Primer On Whipsaws and Reactive Indicators

I was asked the other day if I thought the HCM-BuyLine® has done its job in this bear market and my answer, with no hesitation, was a resounding YES. In this week’s Wealth Watch I’m going to do a postmortem of the last 9 months and review the last 20 years of the HCM-BuyLine®, so...[READ MORE]⁸

_{This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice.}

Tax-Deductible Educator Expenses

The educator expense deduction allows eligible teachers and administrators to deduct part of the cost of technology, supplies, and training from their taxes. In this case, an “eligible educator” is a taxpayer that is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide. They must work at least 900 hours a year at a school that provides elementary or secondary education.⁹

In 2022, educators can deduct up to $300 of trade or business expenses not reimbursed by their employer, a grant, or another source. Some examples of covered expenses include:

Professional development course fees
Books
Supplies
Computer equipment
Other classroom equipment
Personal protective equipment (masks, disinfectant, etc.)

_{* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.}

Choose In-Season Produce This Fall

Eating healthy is essential to keep you and your family feeling good as the days get shorter and the temperature drops. One of the easiest ways to incorporate fresher, riper produce into your meals is to buy in-season items. Generally, in-season produce, harvested at the right time, is full of flavor and nutrition. Plus, sometimes fruits and veggies cost less when they're in season!¹⁰

Here are some healthy picks that are in-season during the fall:

Apples
Beets
Brussels Sprouts
Carrots
Cauliflower
Pumpkin
Winter squash
Raspberries
Celery

What are some of your favorite fall produce items?

Arugula Pesto Pasta with Garlicky Breadcrumbs

Total time: 25 mins

Yield: 1 cup

Ingredients:

Garlicky Breadcrumbs:

1 tablespoon extra virgin olive oil
1 cup sourdough breadcrumbs
1 garlic clove very finely minced
kosher salt to taste
freshly ground black pepper to taste

Arugula Pesto Pasta:

3-4 large garlic cloves
5 ounces baby arugula
3 tablespoons toasted pine nuts plus more for garnishing
1 tsp lemon juice
½ cup extra virgin olive oil
⅓ cup finely grated Parmigiano-Reggiano cheese plus more for serving
kosher salt to taste
freshly ground black pepper to taste
12 ounces dried pasta *recommended: bronze-cut rigatoni, fusilli, trofie, farfalle, or spaghetti

Instructions:

Bring a large pot of salted water to a boil.
Prepare the Garlicky Breadcrumbs: Heat the olive oil in a medium skillet. Add the breadcrumbs and toast for about 3 minutes, stirring constantly, until they are golden and crispy. Season with salt and pepper. Add the garlic and continue sautéing for an additional 30 seconds or so. Transfer to a small bowl and set aside.
Prepare Arugula Pesto: Pulse the garlic cloves in a large food processor until finely minced. Add the arugula, pine nuts, lemon juice, and olive oil. Pulse until mostly smooth. Season to taste with salt and pepper. Set aside.
Add the pasta to the boiling water and cook until al dente. Reserve one cup of the pasta cooking water and drain the pasta in a colander. Transfer the pasta back to the same pot, add the arugula pesto, grated parmigiana cheese, and toss until evenly coated - adding a couple splashes of pasta cooking water as necessary.
Serve the arugula pesto pasta with a sprinkling of garlicky breadcrumbs. Top with additional toasted pine nuts (as desired) and grated Parmigiano-Reggiano cheese.

Footnotes and Sources

^{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}

^{8. howardcm.com, September 21, 2022}

^{9. IRS.gov, February 24, 2022}

^{10. SNAP-Ed Connection, U.S. Dept. of Agriculture, June 1, 2022}

^{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.}

^{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.}