February 27, 2023
Forefront‘s Monday Market Update
Give and Take
When I was growing up, my mother used to tell me to pick my battles, but it wasn’t until having my children that I fully understood what that meant.
My wife, Christina, is a Middle School, Special Education, and Science Teacher, so she leaves the house to get to school before our kids even wake up most days. This leaves me responsible for getting my children, AJ, and Priya, ready for school, which is the ultimate game of give and take. They will always leave the house with eating a good breakfast and brushing their teeth, but those are the only guarantees I can make. AJ wore shorts every day until December, and he walks to school. Initially, I tried to reason with him, but eventually, I just let it go. I won this battle because one morning in December, AJ sprinted up our road after already leaving for school and tore his way upstairs. He changed into pants because it was too cold.
Dad – 1 AJ – 0!
Trade-offs in the Economy
Much like parenting, investing, and our economy come with trade-offs. The more we recognize and understand them, the less anxiety we will feel from the constantly changing headlines and economic news.
From 2010-2020 the economic environment was one of low GDP growth, low inflation, stagnating wages, a slow labor market, near 0% interest rates, and a booming stock market.
Since 2020 our economic environment has been one of higher GDP growth, higher wages, higher inflation, a fantastic labor market, low unemployment, higher interest rates, and a stock market that is just eh.
If we want wages to go up so everyone in America is making more, we must accept that higher inflation will come with it. We must accept the low rates on our savings accounts if we want low mortgage rates. If we want higher economic growth, that will come with a much tighter labor market.
There won’t ever be a perfect economic environment where we can all borrow for cheap but get high yields on our savings, our wages grow, and it is easy to find a job, all while inflation stays low. It doesn’t work like that, unfortunately.
Pick your Battles
Much like parenting, life comes with trade-offs and picking your battles. For nearly two decades, savers have received almost nothing in their savings accounts, while two generations benefitted from hyper-low interest rates. Now, savers are being rewarded on the money in the bank in the form of higher interest earned, while home buyers are finding interest rates to be higher and inventory to be low due to no one wanting to sell their house while they have a sub 3% mortgage.
The economy, like life, will ebb and flow, and the more you tie your happiness and joy to those ebbs and flows, the more miserable you are guaranteed to be. “Winning” in investing is like winning in golf; you never worry about what the person you are playing with is doing; you focus on your game and execute. Savings and investing are the same; your game is specific to you and your family. You need to devise and execute a game plan and not worry about your neighbor’s new car or the pool going in up the street. For those people, that is what they want to be built into their plan, but perhaps travel and experiences hold more value for you. The give and take of life are specific to you.
Stock market calendar this week:
| MONDAY, FEB. 27 | |
| 8:30 AM | Durable goods orders |
| 8:30 AM | Core orders |
| 10:00 AM | Pending home sales |
| 10:30 AM | Fed Gov. Jefferson speaks |
| TUESDAY, FEB. 28 | |
| 8:30 AM | Advanced U.S. trade balance in goods |
| 8:30 AM | Advanced retail inventories |
| 8:30 AM | Advanced wholesale inventories |
| 9:00 AM | S&P Cash Shiller home price index (20 cities) |
| 9:45 AM | Chicago Business Barometer |
| 10:00 AM | Consumer Confidence |
| 2:30 AM | Chicago Fed President Goolsbee speaks |
| WEDNESDAY, MARCH 1 | |
| 9:00 AM | Minneapolis Fed President Kashkari speaks |
| 10:00 AM | ISM manufacturing |
| 10:00 AM | Construction spending |
| Auto sales | |
| THURSDAY, MARCH 2 | |
| 8:30 AM | Initial jobless claims |
| 8:30 AM | Productivity (revision) |
| 4:00 PM | Fed Gov. Waller speaks |
| 6:00 PM | Minneapolis Fed President Kashkari speaks |
| FRIDAY, MARCH 3 | |
| 10:00 AM | ISM services |
| 11:00 AM | Dallas Fed President Logan speaks |
| 3:00 PM | Fed Gov. Michelle Bowman speaks |
Most anticipated earnings for this week:
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.