“A good decision is based on knowledge, not on numbers.”
-Plato
Here’s what you need to know this week:
· Stocks hit all-time highs as the labor market skids
· Iran negotiations and more inflation data make for another busy week
New Office
Quick reminder, we’re moving! Our new office is located about one mile from our current office:
Our old office is circled in red and the new office is circled in green. Our new address will be 3817 NW Expressway Ste 1030; again, we will not be moving until October, but we wanted to let everyone know about the beginning of this exciting new chapter!
Back on Top
The S&P 500 and Dow Jones both reached new all-time highs after spending most of the summer rangebound. The tech-heavy NASDAQ also posted a strong gain and is within striking distance of its own high water mark. Much of the recent selloff came from stocks related to artificial intelligence, and many of them were pushed lower by the sudden collapse of Situational Awareness, an A.I. focused hedge fund in San Francisco. Situational Awareness was forced to sell their holdings at fire sale prices in order to meet their debt obligations, and the sudden mass selling drove down the prices of the stocks they sold.
In other news, on Friday we received the nonfarm payrolls (NFP) report for the month of July. The report, more informally known as simply “the jobs report”, showed the US economy losing 23,000 jobs, a sharp divergence from the 83,000 gain expected by analysts:
The report also revised down the May and June jobs reports by a combined 103,000 which shows the labor market in a more precarious position than previously thought. While labor market deterioration is never a good thing, this report does have a silver lining. The Federal Reserve tends to raise interest rates in times of high inflation and low unemployment; inflation is still relatively high due to rising oil prices from the Iran War, which has raised the prospect of a rate hike in recent months. However, a rising unemployment rate combined with inflation beginning to cool may convince the Fed to hold off on a hike at their next meeting.
No Time for Rest
Investors will get no breather as we head directly into another action-packed week. The negotiations with Iran continue apace; President Trump told Axios on Sunday that he plans to use economic pressure to bring Iran closer to an agreement[1]. On the other side, Iran’s Foreign Minister Abbas Araghchi told reporters on Saturday that Iran is “very close” to an agreement but that Iran is still demanding control of the Strait of Hormuz and payment for damages to its capital of Tehran.
We will also receive two key inflation reports this week. The first is the Consumer Price Index (CPI) report for the month of July, coming later this morning. CPI measures inflation on prices paid by consumers, and the report is expected to show monthly inflation at 0.2% and annualized inflation at 3.4%.
We will also receive the Producer’s Price Index (PPI) report for the month of July tomorrow morning. The PPI report measures inflation paid by producers (wholesalers, manufacturers, etc.) and the report is expected to show monthly inflation at 0.3% and annualized inflation at 4.9%[3]. If these reports come in light then they may give the Federal Reserve more incentive to hold interest rates steady at their meeting next month. Last month’s surprisingly weak jobs report lowered the odds of a Fed rate hike from 65% to 45%, and odds falling further would likely give stocks an additional boost[4].
What Else
· The Senate narrowly voted to confirm Todd Blanche as the latest US Attorney General
· The OKC Streetcar is now free to ride *permanently* after a free test period showed a strong increase in both ridership and consumer spending downtown
· The Treasury announced the commencement of a new gold coin with President Trump’s face on it; the coin will not be usable as currency due to a law disallowing currency with the visage of a living person
· Senator Mitch McConnell has left a rehabilitation facility and is recovering at home; his team has provided no timeline for his return to the Senate
· Russia has ramped up ballistic missile strikes into Ukraine, marking a new escalation in the war since peace talks began
· The Rhine, a major waterway through Europe, recorded its lowest water level since 1880
· Tesla and SpaceX announced a joint venture building Terafab, a $17 billion A.I. datacenter in Texas
What We’re Reading
Norman Vincent Peale once said “Shoot for the moon. Even if you miss, you’ll land among the stars.” A recent SpaceX rocket turned the phrase on its head, crashing into the moon after drifting off course for the past year.Astronomers in Chile have identified the debris plume from the crash and the incident has reignited the discussion surrounding “lunar litter”, meaning leftover human artifacts on the moon. Click below to read more about the wayward rocket:
· SpaceX Ship Collides with Moon
What’s Happening Downtown
This Saturday is Workshop Saturday at the Myriad Gardens. This event features five different classes that range from one to four hours and includes yoga, cooking, painting and gardening classes. The yoga class is free and the other classes have entry fees ranging from $15 to $50 depending on the class. Click below for a full schedule of the classes and costs:
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Bill Daniel, Sam Postich, Jenni Hess, Hannah Hartman
[1] Bloomberg [2] Washington Post [3] Yahoo! Finance [4] CME Fedwatch