Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Paolo Wealth Management Group of Wells Fargo Advisors. Leaves are starting to fall, sun starts to set earlier, football season is starting, we are approaching the holiday season, yes it’s September. Thanks for joining us, let’s see what Phil has to say about the month of August.
· According to Axios, through mid August, nearly 80% of companies have beaten earnings estimates for 2Q23. That said, the third quarter may prove to be more challenging. According to FactSet, of the 79 companies that have issued 3Q23 guidance, 49 were negative (meaning lower than the previous consensus), while 30 issued positive guidance.
· Existing home sales in the U.S. have been hovering near the lowest levels seen during COVID, which hadn’t been seen since the 2008-2010 timeframe. The inventory of existing homes for sale has been very low this year, as many owners of existing homes wish to avoid swapping out the low interest rate on their existing mortgage to borrow at a rate that now averages close to 8.0% for a 30-year fixed rate mortgage.
· According to recent data from the SEC (Money Market Fund Statistics, period ending July 2023) money market funds have taken in $724 billion since the end of 2022. While money market rates may change more quickly than other rates, a quick comparison of the yields available on stocks, bonds, and money market funds makes it clear why investors are gravitating to these short-term funds. According to data from FactSet, the U.S. Government 3 month yield is currently 5.4%, versus 1.62% for the S&P 500, 4.19% for 5 year Government debt, and 4.06% for higher yielding U.S. stocks (represented in this chart by the iShares Core High Dividend ETF)
Source: FactSet, data accessed August 29, 2023. Data from 8/1/08 to 8/28/23. NTM = Next Twelve Months. An index is not managed and is not available for direct investment. Past performance is not a guarantee of future results.
· Axios stated for 2Q23 nearly 80% of companies have beaten EPS estimates, but guidance is predominantly lower for 3Q23.
· Existing home sales are down, as high mortgage rates act as a disincentive to sell (and replace) your home and mortgage.
· High short-term rates have caused money to flood into money market this year, as the funds currently yield more than most stocks and 5 year government bonds.
Now let’s see what Ryan and James have to say about our beloved end of the summer holiday.
Thanks Phil.
Ryan one of my favorite holidays is Labor Day.
RYAN: Oh yeah and why is that…
JAMES: Because my favorite restaurant Waffle House was established on a Labor Day and football season is here. Did you know that Labor Day is considered the “Unofficial” NFL season kickoff. Most of the time, the NFL plays its first official season game the Thursday after Labor Day. Is the Richard’s household excited for football.
RYAN: Yes we are James. According to us.gov, Labor Day was celebrated before the US government created a Labor Dept. The US DoL was founded on March 4, 1913, 19 years after Labor Day became a Federal Holiday.
JAMES: That doesn’t seem right. But what is even cooler is that Oregon was the first to adopt it statewide 7 years prior to the Feds.
RYAN: That is pretty cool and President Grover Cleveland was the president to make it official.
JAMES: We hope you all have a great Labor Day.
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