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Staying Patient: Market Commentary

Kris Venezia, Market Strategist

I wanted to dig into inflation. Unfortunately, inflation is still running hot.

We had the CPI report, consumer price index, which is put out monthly. It gives us that inflation number we quote, right now it's 8.2%. The number reflects an 8.2% increase in what Americans spend on an average basket of goods.

The goal from policymakers is to have inflation around 2%. You can see we're miles away from two-percent.

The hotter areas of September inflation included airfare and medical services. The cost of buying a plane ticket is up 42% from the same time last year. Medical services, which includes health insurance and visiting the doctor, rose at its fastest pace since 1984.

Food at grocery stores and restaurants continues to rise at about 1-percent a month. There has been no cooling down there. The report showed rents rising more than half-a-percent. It's been up between half-a-percent and one-percent each month this year.

The biggest concern I have, which bleeds through into this entire hot inflation report, is on the labor market. Restaurants, airlines, and medical facilities are still having a difficult time staffing. In order to lure workers, they are having to raise wages. When they raise wages, they pass on some of that cost to prices.

Until the labor market improves in these service jobs, it's difficult to see some of this inflation come down. You create a spiral of higher wages, leading to higher prices that continues until demand breaks. Eventually, prices get so high that people just can't afford the plane ticket, the dinner at Outback, or that physical therapy. And that's when you see real economic pain.

Daryl Eckman, President

The point I want to make is that we have dealt with volatility like this before.

Inflation really comes from an overheating of a variety of factors. Some of the stimulus that went into the global system certainly triggered, or was a factor, in the current inflationary environment.

We're seeing some concerns in the real estate market. There's some difficulties as activity slows down in that space. Real estate plays a big role in the U.S. and global economy. Jobs, economic activity, and other items stem from the real estate industry.

We have put cash on the sidelines to do buying in our clients accounts. We have been fortunate to be out ahead of some of this downturn.

We have started nibbling a little bit, but we're still not feeling like now is the time to be very aggressive. The Fed has been aggressive trying to combat inflation and that has an impact on stock prices.

I want to encourage you to call in if you're feeling uneasy. We get paid to talk to you during the tough times. If you're looking at your statement and not feeling well, give us a call. The good times outweigh the bad times, but the bad times obviously do not feel good.

Clint Carpenter, Director of Operations

I’d like to just give a brief update on the eventual transition that is taking place after Charles Schwab’s acquisition of TD Ameritrade. Combining two companies like this takes quite a bit of time, and it sounds like a lot of work has been going on mostly behind the scenes up until this point. Schwab and TD have begun to outline the transition process to advisors like us and we now know that the transition will take place in Spring of next year, 2023.

We know that in almost 99% of cases, this will be a completely hands-off transfer. No paperwork will be required and accounts will simply move to the Schwab platform. The biggest difference clients will notice will be new account numbers and that statements will come from Schwab instead of TD Ameritrade. There are no changes to our relationship with clients whatsoever, and it will be very much business as normal. We do understand that you may have questions about this transition, however, and of course invite you to reach out with any questions ahead of next year. We’ll be sure to communicate more firm dates as we receive them.


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