September Investment Perspectives
Near-term uncertainty, quantitative tightening measures, and preparing for September stock activity.
In this month's issue:
Near-Term Uncertainty is High - Mark Luschini
Against a particularly uncertain macroeconomic backdrop, we have reduced conviction in our near-term views.
Inflation and its impact on consumer spending are the primary concerns clouding our perspective about the economy and stock market. The path of inflation and its impulse on consumption will perform an integral role in gauging the risk of recession or its severity.
Does Quantitative Tightening Matter? - Guy LeBas
Federal Reserve monetary policy matters a lot for markets.
For fixed income, policy is arguably the single-biggest input into returns (although economic conditions inform policy). Certainly, in the post-Global Financial Crisis world, many investors believe, rightly or wrongly, that Fed policy is the largest input into equity returns as well. In 2020-2021, policy was easy or easing, as evidenced by zero overnight interest rates plus tens of billions in monthly Fed bond buying, the latter a policy known as quantitative easing (QE). Today, policy is tightening, as measured by repeated rapid increases in overnight interest rates and the reverse of that bond buying, a policy which has earned the perhaps obvious designation of quantitative tightening (QT).
A September to Remember or One to Forget? - Greg Drahuschak
By August 15, 2022, the S&P 500 had a 17.4% gain from its most recent low on June 16, 2022, which suggested that last month might be one of the better Augusts in many years. Instead, technical resistance at its 200-moving average and the August 26, 2022, speech by Federal Reserve Chairman Jerome Powell sent the S&P 500 into a downward spiral that ended with the index down 4.24% for the month.
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