What a difference a week makes. The market soared, with the S&P 500 up over 5%.  The S&P is 500 big US companies selected by Standard & Poor’s to reflect the US economy. The midterms didn’t have as big of an impact, although historically markets have performed best when the government is split.[1]  The big news was Thursday’s inflation report.

There are two common measurements for inflation: the Consumer Price Index, or CPI, and the Personal Consumption Expenditures, or PCE.  Both reflect the change in prices, and both have “core” versions that strip out more volatile categories such as fuel and food.  The Federal Reserve Bank’s preferred measurement for inflation is the PCE[2], as it reflects consumer behavior as well as price changes. 

We won’t have another PCE report until December, but last week’s CPI report was positive.  The CPI dropped below 8% for the first time in 8 months, coming in at 7.7%.  The monthly increase was 0.4%, compared to an expected 0.6% increase.[3]  Further, Core CPI was down to 6.3%, again beating expectations.[4] This has led to wide-spread belief that, while the Fed will continue to raise interest rates, December’s will only be 0.50%, and both the size and pace of increases will slow.

The Federal Reserve Bank has a target inflation of 2%, so we still have a way to go on inflation, but it appears the worst may be behind us.

Other financial news from last week is the freeze on President Biden’s student loan relief program. A federal judge has ruled the program unlawful.  This ruling will most likely be appealed, so we don’t have a final decision on the program.  If you’ve already applied, the government will hold your application until a final ruling has been made. Either way, loan payments are set to resume in January.  This is a good time to adjust spending so that you’re ready for those payments.

Your action item this week is to mulch your leaves. Mulching your grass clipping and leaves provides the equivalent of an application of fertilizer, saving you money and reducing waste going to the landfill. If you are going to fertilize, you can have a soil analysis done to see what you really need before spending your money.  The Maryland Department of Agriculture has more information on their website.

We have some great educational events coming up, so be sure to follow us on Facebook and check out our website at covingtonalsina.com.

Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.

[1]https://www.nytimes.com/2022/11/08/business/wall-street-midterm-elections-gridlock-washington.html

[2]https://www.investopedia.com/fed-s-preferred-inflation-gauge-rises-more-than-expected-in-august-2022-6745919#:~:text=The%20PCE%20Price%20Index%20is%20the%20Federal%20Reserve's%20preferred%20gauge,Consumer%20Price%20Index%20(CPI).

[3]https://www.cnbc.com/2022/11/10/consumer-prices-rose-0point4percent-in-october-less-than-expected-as-inflation-eases.html

[4]https://www.cnbc.com/2022/11/10/consumer-prices-rose-0point4percent-in-october-less-than-expected-as-inflation-eases.html