White Hot Inflation Report Alarms Investors

White Hot Inflation Report Alarms Investors

September 19, 2022
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A hotter-than-expected inflation report sent stocks sharply lower last week as investors faced the prospect of more aggressive interest rate hikes by the Federal Reserve for perhaps a longer period.

The Dow Jones Industrial Average fell 4.13%, while the Standard & Poor’s 500 lost 4.77%. The Nasdaq Composite index dropped 5.48% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 1.78%.1,2,3


Inflation Deflates Markets  

Stocks suffered their worst day in more than two years last Tuesday as markets were caught off-guard by a higher-than-anticipated August inflation report.

Markets expected the August report to show a substantial cooling of inflation, potentially allowing the Fed to ease up on interest rate hikes. Instead, the elevated inflation number not only undercut those easing hopes but raised the possibility of a more significant rate hike. On Tuesday, traders assigned a 28% probability of a 100 basis point hike, from a 0% chance just the day before. Price action remained choppy for the remainder of the week, closing the week with additional losses as a global package-delivery company warned of a worldwide recession.4

August CPI Disappoints

August’s Consumer Price Index (CPI) rose 8.3% from a year ago, showing a continued deceleration in price increases (July’s CPI was 8.5%, and June’s was 9.1%). Despite moderating price increases, traders were disappointed, given the general expectation of a more substantial slowdown in inflation.5

Core inflation (excluding food and energy) was particularly alarming to investors, which jumped 6.3% year-over-year. That number was well above the 5.9% rate from June and July. From the market’s perspective, sufficient inflationary pressures exist for the Fed to maintain its hawkish interest rate policy for possibly longer than investors had hoped.6

This Week: Key Economic Data

Tuesday: Housing Starts.

Wednesday: Federal Open Market Committee (FOMC) Meeting Announcement. Existing Home Sales.

Thursday: Index of Leading Economic Indicators. Jobless Claims.

Friday: Purchasing Managers’ Index (PMI) Composite.

Source: Econoday, September 16, 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

Monday: AutoZone, Inc. (AZO).

Wednesday: General Mills, Inc. (GIS).

Thursday: Costco Wholesale Corporation (COST), FedEx Corporation (FDX), Lennar Corporation (LEN).

Source: Zacks, September 16, 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.


Markets Remain Uncertain After Unexpected Inflation Numbers

The markets sold off hard on Tuesday, with the CPI data being hot. The September CPI reflecting August 2022 inflation data came in at 8.3%, which was higher than the consensus forecast but lower than the two previous readings. A 75-bp rate hike from the Fed is almost certain for September, and rates are likely to...[READ MORE]7 

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. 

 



How to Find Tax Help in Other Languages

The IRS currently translates important and helpful tax information in seven languages, including:

  • Spanish
  • Chinese (Traditional)
  • Chinese (Simplified)
  • Korean
  • Russian
  • Vietnamese
  • Haitian Creole

Some multilingual resources include The Taxpayer Bill of Rights, important filing information, e-file resources, forms and publications, and the IRS2Go mobile app.

For access to information in these languages, taxpayers can click on the English dropdown tab in the top menu bar on the IRS.gov home page. The dropdown will list the other languages a taxpayer can choose to view IRS.gov pages. In addition, the IRS also offers interpreter services in more than 350 languages.8

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


What is Pickleball?

Pickleball has taken the world by storm, and for a good reason! The game is easy to play, it’s great exercise, and you can play at many different levels.

Pickleball combines tennis, ping pong, and badminton elements to create an addicting and fun sport. To play, you hit a Wiffle ball (a plastic ball with holes) with a paddle on a badminton-sized court. There are some unique rules to pickleball, but overall, it has simple gameplay and is super fun.

If you want to start playing pickleball, check out your local parks and tennis courts! More and more areas offer open play, rec leagues, and lessons for players of all levels.9


Plum Torte

Total time: 1 hour

Yield: serves 8

    Ingredients:

    • ½ cup (1 stick) unsalted butter, softened
    • 1 cup granulated sugar plus 1 tablespoon, divided*
    • 2 large eggs
    • 1 cup all-purpose flour
    • 1 teaspoon baking powder
    • ½ teaspoon salt
    • 6-12 plums, depending size, pitted and halved**
    • Juice from ½ lemon
    • 1 teaspoon cinnamon

    Instructions:

      1. Preheat the oven to 350°F and butter the inside of a 9-inch springform pan. Cream together the butter and 1 cup sugar in a medium bowl until light and fluffy. You can use an electric mixer, but I find a wooden spoon and a little elbow grease to the job just fine. Add in the eggs, one at a time, making sure each is fully incorporated. Sift in the flour, baking powder and salt, then mix until just combined.
      2. Spread the batter into the pan and smooth the top. Arrange the halved plums cut-side-down, then use your fingers to gently press them into the batter. Squeeze the lemon juice over the fruit, then mix together the remaining tablespoon of sugar and cinnamon, and sprinkle that over the top.
      3. Bake for about 45 minutes, or until the cake is golden brown and a toothpick inserted into the center comes out clean (of raw batter, that is. ) Allow the cake to cool on a rack for at least 30 minutes prior to cutting. Serve warm or at room temperature. The cake is also excellent served cold after chilling in the fridge overnight.

    Notes:

    *Depending on how sweet your plums are and how sweet you like your cake, the sugar can be cut down to ¾ cup.

    **You will use more or less plums depending on the variety and size, but also depending on your preference. I tend to use more plums for a fruitier cake, but you can always opt to use less for a cakier-cake. You can't go wrong either way, trust me.


    



    Footnotes and Sources


    1. The Wall Street Journal, September 16, 2022

    2. The Wall Street Journal, September 16, 2022

    3. The Wall Street Journal, September 16, 2022

    4. The Wall Street Journal, September 13, 2022

    5. The Wall Street Journal, September 13, 2022

    6. The Wall Street Journal, September 13, 2022

    7. howardcm.com, September 15, 2022

    8. IRS.gov, March 16, 2022 

    9. USAPickleball.org, May 26, 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.

    Copyright 2022 FMG Suite.

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