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Weekly Market Update with Brian Ransom 12 May 2023 Thumbnail

Weekly Market Update with Brian Ransom 12 May 2023

Welcome to the weekly market update from Signature Wealth Management. I’m Brian Ransom, Research Director from Signature Wealth and here’s what happened in the market this week.

Over the last month, the S&P has been stuck in a fairly volatile, very tight sideways trading pattern as the market decides A. whether we’re in a recession or not, B. whether that recession will be shallow or deep, and C. whether inflation is falling fast enough.

In the news this week, inflation fell once again for the month of April to 4.9% year-over-year. Bank failure fears have shifted to regional bank, PacWest. And the debt ceiling fight rages on in Washington. No deal has yet been made on the debt ceiling to avoid a government default.

Taking a closer look at inflation, while the year-over-year rate fell to 4.9%, the month-over-month reading remained stubbornly high at .4%. We really need lower month-over-month readings for the next year in order to hit the Federal Reserve target rate of 2%. In fact, that month-over-month rate needs to be at .2% or below for the next year to get us close to that 2% target. .3% gets us closer to 3.7% year-over-year. The current rate of .4% would put us exactly at 4.9% for the next year. And any increase of the month-over-month rate from .4% would show a year-over-year increase in inflation for the next year. Which means the Fed might not be as willing to cut rates like many investors think as long as the month-over-month rate remains above .2%.

Whether or not we are in a recession is anyone’s guess. There are an impressive number of conflicting signs in the market and the economy and certainly no one knows exactly how severe a possible recession might be. I would posture that, regardless of the severity, the volatility is not over just yet. Shown here is a historical graph of small cap performance as measured by the Russell 2000 relative to the S&P 500 large cap index. In time periods following a recession, once a recovery has officially began, you typically see small cap stocks outperform large caps for an extended duration. We saw this in the years following the Dotcom crash, the global financial crisis, and the Covid pandemic. Small cap stocks typically have higher risk, higher reward properties that investors desire once the coast is clear. Today, we are seeing the complete opposite with small caps falling over the last few months.

This Weekly Market update is meant to be an enticing appetizer for market and economic insight. For a heartier serving, please check out our podcast, “Up and to the Right” on all your favorite podcasting apps. And for the full course meal, check out our website at signaturewmg.com. As always, don’t forget to smash that subscribe button!


1.FactSet Research Systems. (n.d.). S&P 500 (Interactive Charts). Retrieved May 12, 2023, from FactSet Database.

2.Bureau of labor statistics. Graphics for economics news releases. “12-month percentage change, consumer price index (past 20 years).” Updated May 10, 2023. Retrieved from https://www.bls.gov/cpi/. 

3.FactSet Research Systems. (n.d.). Russell 2000 relative to S&P 500 (Interactive Charts). Retrieved May 12, 2023, from FactSet Database.

Signature Wealth Management Group is registered as an investment adviser with the SEC. Signature Wealth only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. 


Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. 


Information contained herein does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. 

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.

The Russell 2000® Index measures the performance of the small-cap segment of the US equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 7% of the total market capitalization of that index, as of the most recent reconsitution. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

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The S&P U.S. Style Indices measure the performance of U.S. equities fully or partially categorized as either growth or value stocks, as determined by Style Scores for each security. The Style series is weighted by float-adjusted market capitalization (FMC), and the Pure Style index series is weighted by Style Score subject to the rules described in Index Construction.

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