In this week’s issue of Steady Investor, we explore current events impacting the market, such as:
• The fall in the unemployment rate
• Core inflation cools in July
• Possible higher gas prices soon
The Unemployment Rate Falls, But So Does the Pace of Hiring – The Labor Department reported that nonfarm payrolls rose by 187,000 in July, up from a revised 185,000 new hires in June. The unemployment rate fell to 3.5%. By most accounts, the U.S. jobs market remains in solid shape, but these recent figures signal a cooling that may come as welcome news to the Federal Reserve. Though 187,000 new hires in July signals the labor market remains tight, it’s meaningful to note that this pace is a marked step down from the 399,000 jobs/month posted in 2022 and the 287,000 jobs/month pace of the first five months of 2023. While private sector pay rose 4.4% in July – which is materially higher than the pace needed to achieve 2% inflation – the takeaway from this jobs report is that the labor market appears to be finding a balance of not being too hot nor too cold. In other words, the Fed may interpret recent data in the jobs market as being on a steady path to a soft landing.1
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Core Inflation Cools Slightly in July – Readers may sometimes get confused by the myriad inflation measures cited in the media. CPI, the core PCE price index, trimmed-mean CPI, PPI, and so on. The Atlanta Federal Reserve tracks nine different inflation measures, with each one often sending different messages about underlying inflation trends. To simplify matters and to get at the root of what influences the Fed and interest rate policy, readers should focus on just two inflation measures: core CPI and the core PCE price index. The Fed cares more about core prices because they tend to be better predictors of future inflation trends. The Labor Department reported on Thursday that core CPI rose by 4.7% year-over-year in July, which marked a slight cooling from June’s 4.8% annual rate. Month-over-month data offered a similar takeaway of improving conditions, with core CPI rising 0.2% from June to July. Another way of looking at core inflation is by tracking the 3-month annualized rate, which in July came in at 3.1% – the lowest print in two years.3
Why Americans Could See Higher Prices at the Pump in the Coming Weeks – Many readers have likely noticed gas prices ticking higher lately. Higher oil prices are to blame. In the past six weeks, benchmark crude oil prices have risen over 21%, following decisions by Saudi Arabia and Russia to cut production in a targeted effort to mitigate rising global supply levels. Supply and demand of course impact the price of crude, and the demand side of the equation has also had an impact – investors have grown more optimistic about a soft landing in the U.S., which implies better-than-expected demand for oil. When oil prices are rising and are expected to rise further, the price of gas tends to follow. But other factors are affecting the price at the pump – summer heat makes refining oil into gas more costly, since it slows the cooling process; and a looming hurricane season has many oil futures traders betting that refineries could take a hit to production later this summer and fall, which also puts upward pressure on prices.4
Overcoming Current Market Volatility – It is impossible to avoid volatility, but there are ways investors can minimize the worst impacts of a volatile market.
In our exclusive guide, ‘The Do’s and Don’ts of Stock Market Volatility’ we provide recommendations for investors and explore:
• 3 best practices to successfully manage periods of market volatility
• 3 most common mistakes investors make, and why they are so damaging to your long-term investing goals
• Historical data that supports our conclusions and underscores the recommendations we propose
If you have $500,000 or more to invest, get our free guide today!
Download Your Copy Today: The Do’s and Don’ts of Stock Market Volatility5
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