Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. While the September has pushed us to be more efficient and better, October is here and the leaves are changing, the weather is cooling down, and Halloween is upon us! Let’s see what Phil’s three topics are for the month of September!
Thanks James.
· Although stocks are up this year, with the S&P 500 rising 17.4% and foreign stocks (as measured by the MSCI All Country World Index, ex-USA)** up 8.4%, earnings have actually contracted for the last several quarters. Currently, analysts expect this trend to reverse in 3Q23, with 0.2% EPS growth expected from the S&P 500 according to FactSet. If those estimates prove to be correct, it will mark the first quarterly growth since 3Q22 (data as of 9/19/23).*
· According to data from the Institute for Supply Management, Service sector (non-manufacturing) activity continues to grow at a pretty healthy pace, with an August reading of 54.5 (anything over 50 represents expansion, while readings under 50 represent contraction). The manufacturing economy remains in a slump, with an August reading of 47.6 marking the tenth consecutive month of decline. The picture in the Eurozone is similar but weaker, with an August Manufacturing reading of 43.45 and a Service sector reading of 47.94.
· Election Cycle Theory – according to an article published by the CFA Institute earlier this year, the best year of the Presidential election cycle to be a stock investor has been year three (which 2023 is). The third year of a Presidential term has delivered an average S&P 500 return of 13.5%, with positive results 78.3% of the time. Next year will be the fourth year of this administration, which has historically been the second-best point in the cycle, with an average S&P 500 return of 7.5% and positive returns in 75% of years. We would note that these statistics only cover Presidential terms from 1928 to present, as the S&P did not exist in its current form before 1926. Keep in mind that past performance is not an indication of future results.
https://blogs.cfainstitute.org/investor/2023/02/14/election-cycle-theory-year-three/
In Summary:
1. Stocks are up both domestically and internationally in 2023, and earnings are finally expected to turn positive in 3Q23, with growth of 0.2%.
2. According to ISM data, U.S. service sector activity remains in expansion while manufacturing remains in contraction. Both parts of the economy
Are contracting in the EU, although the service sector is likewise stronger.
3. Historically, 3rd years of Presidential cycles have been the best for stock investors, although 4th years (which 2024 will be) have been the second best.
Now let’s see what James & Ryan have to say about the spooky October.
JAMES: Thanks Phil.
You may or may not know that Halloween is my favorite holiday of the year and not just because it is Dan Huffman’s birthday but also because it is the one day of the year you get to pretend to be a scary monster.
RYAN: That is true and what scary monster will you pretend to be James?
JAMES: ?????
RYAN: ????
JAMES: October is also a month full of birthday’s in our office! Rachel’s is on the 6th and Margie’s is the 22nd. Happy Birthday Rachel, Margie, & Dan.
RYAN: We can’t forget your birthday James. Which is on the 18th. So Happy Birthday to you too James.
We always want to talk with you. If you feel you know someone who would enjoy this video please feel free to send them the link.
As always stay happy, safe, and healthy and hopefully we will see you very soon.
The views expressed by Huffman Mayer Wealth Management Group of Wells Fargo Advisors are their own and do not necessarily reflect the opinion of Well Fargo Advisors or its affiliates.
Past performance is not an indication of future results. An index is not managed and is unavailable for direct investment.
* Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
** MSCI AC World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 23 developed and 23 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
*** S&P 500 Index is a market capitalization-weighted index composed of 500 widely held common stocks that is generally considered representative of the US stock market. The Index is unmanaged and not available for direct investment.