Market Update: September 8, 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.

 

Well, it looks like the latest rally in the stock market has failed and reversed. Throughout the month of August, the market has been in decline, reaching oversold territory late in the month. A subsequent throw-back rally began but unfortunately did not have enough energy to surpass previous highs. This may signal rising volatility for the intermediate term and it doesn’t look like the rally we have enjoyed for the first half of the year will continue unabated.

In the news this week, the Chinese government has restricted iPhone usage for high-ranking members of the government making Apple a pawn in the US-Chinese relations dispute that has grown in recent years. Parts of Europe, specifically Germany, are seeing decreased economic activity. And companies are beginning to see the impact of rising borrowing costs on the income statement.

Let’s turn now to the state of the US consumer. Personal consumption is a vital part of the US economy, composing nearly 70% of GDP. Thus the financial status of the US consumer is critical in determining the state of the US economy. Since the Global Financial Crisis, US households have been actively deleveraging their balance sheets, decreasing the amount of expenses leaving the household as debt payments. This has helped insure the economy continues to run smoothly despite a global pandemic and rising inflation. Albeit, debt expenses have been rising, we have only just reached pre-pandemic levels.

This delivered status may be changing, however. In the year following the pandemic, personal savings rates surged creating an excess savings bucket in the economy. That trend has since reversed with savings rates now well below trend, drawing down the excess savings bucket. In fact, personal savings rates are the lowest they’ve been since the years leading up to the Global Financial Crisis. This in turn has caused a rise in credit card usage in US households as excess savings recedes but consumer spending continues unabated. Now, we’re still a long way away from reaching “red flag” levels. But the trend is very clear.

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. And don’t forget to like and subscribe.

 

Sources:

1.FactSet Research Systems. (n.d.). S&P 500 (Interactive Charts). Retrieved September 8, 2023, from FactSet Database.

2.JP Morgan Asset Management. “Guide to the Markets.” Slide 24 & 25. Published August 31, 2023. Retrieved from https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/

 

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