by Kenneth J. Entenmann, CFA
One of the oldest Wall Street adages is “Don’t Fight the Fed.”
In general, it means when the Fed is raising interest rates, accept that they are and adjust accordingly. The most of the first half of 2023, the markets have not followed that guidance, constantly rejecting the Fed’s every move. The market convinced itself that the Fed’s rate hikes would cause a recession, unemployment would spike, and inflation would come crashing down. The Fed would have to capitulate on its tightening policy activity.
Money flowed into money market and fixed income funds. Money market funds with 5 percent annual yields were attractive and bonds were back. Everyone loved bonds. Yet, year-to-date, the aggregate bond index is up only 2.46 percent. That would be considered good if a recession did in fact occur, but it did not, at least not yet. Equities are supposed to be toxic heading into a recession and most of Wall Street entered 2023 significantly underweight. Six months into the year, the S&P 500 index was up 9.65 percent and the NASDAQ was up over 30 percent. So much for the hated asset class.
The economy continues to lumber on. No recession, but languishing growth. Manufacturing is clearly in recession. Housing is coming to life; the housing shortage is overwhelming higher mortgage rates; the consumer sector remains on fire. A mixed bag, but not a recession.
The employment market continues to be dysfunctional. In June, the unemployment rate was 3.6 percent. The non-farm payrolls were 209,000, less than the 240,000. Importantly, the average hourly earnings were 0.4 percent, higher than expected. It is good news that the payroll numbers have returned to a more sustainable level around 200,000.
Saratoga National Bank and Trust Co. announce that Dina Trahan and Philip Carr
Carr will also help clients with their home financing experience and guide them through the mortgage application process. He brings more than 10 years of lending services experience to the position.
NBT Bank has announced that Mark P. Sidoti was promoted to branch manager of its Glens Falls office located at 86 Glen St.