Your Weekly Update for Monday, October 14, 2024.
Beacon Rock Wealth Advisors is a dba of BR Capital, Inc. is a financial planning and registered investment advisory firm in Camas, Washington. We are always available to answer your finance questions. Give us a call at (800) 562-7096 or send an email to [email protected].
If you or someone you know is worried about retirement, send us an email or give us a call for a no-obligation Retirement and Social Security Analysis.
If this information is helpful to you, please forward this to a friend and ask them to subscribe at https://newsletters.beaconrwa.com/subscribe.
Have a great week!
Mike Elerath
CERTIFIED FINANCIAL PLANNERTM
CERTIFIED IN LONG-TERM CARE
[email protected]
Bill Roller
NMLS #107972
CHARTERED FINANCIAL ANALYST
CERTIFIED FINANCIAL PLANNERTM
CHARTERED MARKET TECHNICIAN
[email protected]
For more information about Beacon Rock Wealth Advisors, check out our brochure here:Â https://beaconrwa.com/wp-content/uploads/2020/04/BeaconRockBrochure.pdf
Banks, the bond market, and federal offices are closed today in honor of Columbus Day, but the stock market is open. No mail delivery!
Click on the image below to go to https://youtu.be/L3AWKWQT4lU to see the video from October 11 in which Mike Elerath, Bill Roller, and Keller Williams Realtor Michael Harding discuss the financial markets and Clark County real estate.
Please give the video a âLikeâ and check out other videos and subscribe to the channel at https://www.youtube.com/@beaconrwa.
Summary
Markets were UP last week. The Dow Jones Industrial Average was UP 1.21% to 42,863.86 while the S&P500 ended UP 1.11% to 5,815.03. The Nasdaq Composite ROSE 1.13% to 18,342.94. The annual yield on the 30-year Treasury ROSE 11.6 basis point(s) to 4.383%.
Economic data for the week included consumer inflation coming in better on the headline side, but remaining sticky on the core side, while producer prices continued to show moderation. Jobless claims rose following consecutive hurricanes impacting the Southeastern U.S.
Equities were mixed globally last week, with gains in the developed world and declines in emerging markets, due to varying economic results and central bank policy expectations. Bonds pulled back as yields moved higher along with sticky inflation. Commodities were mixed, with oil prices ticking a bit higher but industrial metals down.
Economic Notes
(0/+) The Consumer Price Index for September rose 0.2% on a headline basis, and 0.3% after removing food and energyâeach a tenth of a percent higher than expectations. Headline prices were significantly affected by a -4% drop in the price of energy commodities/gasoline in the month. Other segments were mixed, including rises in airline fares (by 3%), apparel (by 1%), medical care, and auto insurance and repairs. Shelter costs increased only 0.2%, running at half the pace of the prior several months.
Year-over-year, headline CPI rose 2.4% (the slowest pace since early 2021), while core CPI increased by 3.3%. Digging deeper, calculated CPI of âall items less food, shelter, and energyâ rose only 2.1% for the past year, while âservices less rent of shelterâ rose 4.4%, explaining much of the underlying divergences. Energy prices falling -15% for the year dramatically affected headline results, but also helped by declining prices for new and used cars. On the other hand, shelter (up 5%), medical care services (up 4%), and auto insurance (up 16%) were strong on the upside. This report was considered a bit âhotterâ than expected, notably on the core side, with lower crude oil prices largely considered the uncontrollable variable. This inflation persistence implies perhaps a Fed easing policy that could end up being slower in nature than was earlier hoped for.
There are other implications here from a financial planning perspective. A monthly averaging period ending each September is the cut-off used for calculating cost-of-living adjustments (COLA) for the coming calendar year, with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W, as opposed to the urban-focused CPI-U more widely quoted) pointing to a 2025 Social Security benefit increase of 2.5%. Similar calculations are used to adjust other government metrics, such as tax brackets, 401(k) and IRA contribution limits, etc., which tend to be formalized, rounded off, and announced during October. Retirees may not be as thrilled with the smallest COLA increase in four years, but it obviously reflects a normalization in broader inflation trends, which is a net positive.
(0) The Producer Price Index for September was unchanged on a headline basis, a tenth below expectations, while core prices ex-food and energy rose 0.2%, on par with expectations. Goods prices fell -0.2% (led by lower oil prices), offsetting a 0.2% in services prices, each on a seasonally-adjusted basis. Year-over-year, headline PPI rose 1.8%, while core PPI increased 2.8%. By broad group, final demand goods prices fell -1% over the year, while services prices rose 3%âthe latter in keeping with the increase in wage costs. Along with an obvious deflationary impact of falling petroleum prices over the past year, overall producer inflation has shown better trends back toward normalcy, especially on the goods side.
(0) The preliminary Univ. of Michigan index of consumer sentiment for October fell by -1.2 points to 68.9, below the 71.0 level expected. This was primarily driven by a several point drop in expectations for the future, as opposed to current conditions. Per the surveyors, concerns about the upcoming election appeared to be more of a concerning factor than other global events, such as Ukraine and the Middle East. Inflation expectations for the coming year ticked up by two-tenths to 2.9%, while those for the next 5-10 years fell by a tenth to 3.0%.
(0) Initial jobless claims for the Oct. 5 ending week rose by 33k to 258k, well above the 230k median forecast. Continuing claims for the Sep. 28 week rose by 42k to 1.819 mil., below the consensus call for 1.830 mil. Several factors appeared to be behind the sharp bump in claims, including the obvious effects of Hurricane Helene (roughly half of claims increase), auto plant layoff activity, as well as impacts from a Boeing strike (mostly in OR and WA). No doubt, effects from Hurricane Milton could be sizable from FL in coming weeks, although less so in other states, as opposed to the broader footprint of Helene.
(0) The FOMC minutes from the September meeting showed a wider range of views than usual, in keeping with the change in policy and rare dissent from one member. By the time minutes are released, the formal statement, press conference, and later clarification comments have been analyzed ad nauseum, but the minutes provide some tidbits as to the background of member opinions. Notably, a âsubstantial majorityâ favored a -0.50% cut, while âsomeâ noted that they preferred only -0.25% and âcould have supported such a decision.â (At the same time, several members had also been in favor of a -0.25% in July that wasnât ultimately implemented.) Importantly, it was mentioned that the larger initial cut âshould not be interpretedâ that the pace of future cuts âwould be more rapidâ than what was noted in the Sept. dot plot, which implied two additional quarter-percent cuts this year. (Hence, that path has become the base case for many economists and strategists.) More specifically, participants noted that the labor market was âless tight than it had been just before the pandemicâ with conditions near the FOMCâs goal of maximum employment, although some were worried about the recent rise in the unemployment rate. On the inflation side, âalmost allâ had greater confidence that it was moving toward the 2% target, as labor forces were in balance and economic growth had slowed, which has tended to bring down inflation organically.
Market Notes
| Period ending 10/11/2024 | 1 Week % | YTD % |
| DJIA | 1.22 | 15.42 |
| S&P 500 | 1.13 | 23.25 |
| NASDAQ | 1.13 | 22.89 |
| Russell 2000 | 0.99 | 11.42 |
| MSCI-EAFE | 0.25 | 10.73 |
| MSCI-EM | -1.66 | 15.76 |
| Bloomberg U.S. Aggregate | -0.46 | 2.93 |
| U.S. Treasury Yields | 3 Mo. | 2 Yr. | 5 Yr. | 10 Yr. | 30 Yr. |
| 12/31/2023 | 5.40 | 4.23 | 3.84 | 3.88 | 4.03 |
| 10/4/2024 | 4.73 | 3.93 | 3.81 | 3.98 | 4.26 |
| 10/11/2024 | 4.73 | 3.95 | 3.88 | 4.08 | 4.39 |
U.S. stocks reached new record highs again last week. Sector results were mixed, with technology and industrials leading with gains of over 2% for the week, followed by financials, while utilities pulled back by over -2%. Real estate saw a small decline, as interest rates ticked upward a bit. In the closely-monitored tech and communications segment, strength in NVIDIA offset a decline in Alphabet/Google, as it appears the Department of Justice is considering a legal push for a breakup of the company. Tesla also fell back by double digits as investors appeared less impressed with the lack of detail concerning their new ârobotaxiâ products.
Earnings season for Q3 has begun, with a handful of S&P 500 companies having reported. Per FactSet, earnings growth expectations for the quarter are currently at 4.1%, although upward revisions of a few percent have been the norm for recent quarters. Q3 features expected leadership again from technology, communications, and health careâexpected to run at 10-15% growth ratesâwhile laggards include energy (-24%) and materials (-4%), based on the difficult commodity pricing environment. Revenue growth is expected to come in at a year-over-year pace of 4.6%, with overall S&P profit margins continuing to exceed a historically-high 12%.
Foreign stocks were down on net, with a gains in Europe and Japan offset by declines in U.K. and emerging markets. The U.K. appeared to reverse back into showing positive economic growth, while trade-focused Germany showed deterioration, although both rounded to just a few tenths above or below zero. Emerging markets stocks were driven downward by a declines of around -5% in China. After a strong two weeks, stocks there fell back due to a lack of clarity on announced fiscal stimulus measures, as markets were dubious of sufficiency and timeline. Itâs assumed that added measures, and a speed-up in spending of earlier announced stimulus, will be required to make progress in moving the economy closer to 5% GDP growth goals and moving consumers out of their pessimistic state. Announcements last week were lackluster (with another planned for Sat.), although many of the problems the government are attempting to solve are not easily done so through macro stimulus, as opposed to targeted activities.
Bonds pulled back as interest rates moved up along the intermediate- and long-term parts of the U.S. Treasury curve, along with a sticky CPI report that cast further doubt on the Federal Reserve cutting rates by more than a quarter-percent at the November meeting. Floating rate bank loans outperformed, eking out a small gain, in contrast to traditional bonds. Foreign bonds also fared negatively, along with the headwind of a stronger dollar.
Commodities were mixed, with gains in energy and precious metals offset by declines in agriculture and industrial metals (the latter tied to sentiment around China). Crude oil prices rose nearly a percent last week to $76/barrel, with continued offsetting supply and demand impacts keeping volatility in check.
Mortgage Rates
âFollowing the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April,â said Sam Khater, Freddie Macâs Chief Economist. âHowever, we should remember that the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year. Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.â
The 30-year FRM averaged 6.32 percent as of October 10, 2024, up from last week when it averaged 6.12 percent. A year ago at this time, the 30-year FRM averaged 7.57 percent.
The 15-year FRM averaged 5.41 percent, up from last week when it averaged 5.25 percent. A year ago at this time, the 15-year FRM averaged 6.89 percent.
Freddie Macâs Primary Mortgage Market SurveyÂŽ is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.
Through our relationship with Mortgage Window, Inc. Â (NMLS#2485156) in Vancouver, Washington we originate residential and reverse mortgages.
Selected Cryptocurrencies
| Symbol | Name | Price | 24h % | 7d % | Market Cap | Volume(24h) |
| BTC | Bitcoin | $64,887.83 | 3.57% | 3.27% | $1,282,668,471,924 | $30,964,713,854 |
| ETH | Ethereum | $2,556.74 | 3.69% | 3.63% | $308,127,625,182 | $15,616,917,691 |
| BNB | BNB | $580.55 | 1.31% | 1.54% | $84,720,590,722 | $1,662,429,141 |
| SOL | Solana | $153.01 | 3.87% | 4.34% | $71,880,238,607 | $2,110,244,747 |
| XRP | XRP | $0.54 | 1.26% | 0.40% | $30,515,893,891 | $851,030,304 |
| DOGE | Dogecoin | $0.11 | 1.40% | 1.70% | $16,540,712,008 | $780,886,592 |
| TRX | TRON | $0.16 | -1.65% | 2.91% | $13,856,725,116 | $364,437,948 |
| TON | Toncoin | $5.27 | 0.28% | 0.55% | $13,381,423,911 | $204,817,285 |
| ADA | Cardano | $0.35 | 0.53% | -0.49% | $12,393,426,498 | $231,619,178 |
| AVAX | Avalanche | $29.23 | 0.61% | 7.91% | $11,884,454,486 | $382,496,320 |
| SHIB | Shiba Inu | $0.00 | 2.35% | 0.87% | $10,606,623,854 | $327,406,689 |
| LINK | Chainlink | $11.02 | 0.98% | -3.11% | $6,910,914,914 | $238,367,906 |
| BCH | Bitcoin Cash | $332.90 | 2.49% | 2.94% | $6,582,775,420 | $182,900,878 |
| DOT | Polkadot | $4.29 | 2.77% | 2.90% | $6,456,173,887 | $130,477,516 |
| SUI | Sui | $2.22 | 1.60% | 14.89% | $6,146,394,368 | $1,205,084,154 |
| NEAR | NEAR Protocol | $4.87 | 3.24% | -3.66% | $5,919,571,776 | $281,860,836 |
| LEO | UNUS SED LEO | $6.14 | 0.75% | 2.36% | $5,683,868,208 | $9,918,710 |
Information current as of 5:55 AM PDT, Monday, October 10, 2024. Source: https://coinmarketcap.com
Check us out at https://beaconrwa.com and our affiliated websites at https://reverse-mortgages.us and https://socialsecurityquestionsanswered4u.com.
Sources: Ryan Long, CFA, FocusPoint Solutions, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Citigroup, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management,
MarketfieldAsset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, PIMCO, Standard & Poorâs, StockCharts.com, The Conference Board, Thomson Reuters, T. Rowe Price, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wall Street Journal, The Washington Post. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. FocusPoint Solutions, Inc. is a registered investment advisor.
Notes key: (+) positive/encouraging development, (0) neutral/inconclusive/no net effect, (-) negative/discouraging development.