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Market Insight November 14, 2022

Check out the Market Insight. This week we review inflations impact on the markets, and recent turmoil in cryptocurrencies.
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Inflation Data Slowed in October

What is it? 

The stock markets were relieved to see inflation data that was lower than expected. 

“The Consumer Price Index (CPI) for October reflected a 7.7% increase over last year and 0.4% increase over the prior month, better than Wall Street expected. Economists surveyed by Bloomberg called for a 7.9% annual rise and 0.5% monthly gain.”*

Why does it matter?

Markets responded positively to the news. Stocks jumped higher before markets opened on Thursday, and continued to move that way through the close. While markets have jumped up before continuing down in the past, this is a signal that the markets are happy with the current conditions. Inflation has been a burden on investments for a while. Although the data is only slightly positive, the markets have put emphasis on this glimmer of hope that inflation is being controlled. If inflation continues to be lower than expected, investors may anticipate a lower interest rate hike from the Federal Reserve. For now we are keeping a risk-off allocation, however that may change as the long term down trends could break higher. 

Bad News Brings Crypto Prices Down

What is it? 

“Bitcoin prices dropped below $16,000 Wednesday afternoon after Binance, the largest crypto exchange, backed out of its emergency deal to acquire rival FTX.”**

“Binance CEO Changpeng Zhao said in a memo earlier on Wednesday that there was no “master plan” to take over FTX, and that “user confidence is severely shaken.”***

Why does it matter?

Investments do not perform well when investor confidence is declining. This news hurt the entire industry in the short term. It is yet to see how this evolves longer term. 

“Coinbase Chief Executive Officer Brian Armstrong said Tuesday in a Bloomberg TV interview that if the deal with Binance fell through, it would likely mean FTX customers would take losses.”***

Binance was hoping to provide liquidity, or a place for FTX users to trade their securities held at FTX.***

“The renewed concern about contagion risk is showing up in the plunging prices of digital assets. Bitcoin fell below $16,000, the lowest in two years, after Binance’s announcement.”***

As the news unfolds, investors use that information to capitalize on price changes in an efficient market. This was big news that may change rules and regulations down the line. It also sets a negative precedent for the crypto market as a whole. We will continue to assess these changing conditions in an attempt to invest in line with the trends. For the time being, crypto-related investments are not a place that we want to invest in. 

Other articles we found interesting this week:

California sues 3M, Dupont over toxic ‘forever chemicals’

Bond Yields Fall Sharply After Inflation Data

Dollar hurt by optimism

Current 401(k) portfolio

Our last portfolio reallocation: 5/19/2022. 

Want more information?

The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach. 

Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.

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Sources:

*Alexandra Semenova. “Stock futures surge as CPI shows inflation eased in October”. 11/10/2022. Yahoo FInance. https://finance.yahoo.com/news/stock-market-news-live-updates-november-10-2022-123913396.html

**David Hollerith. “Bitcoin price drops below $16K after FTX-Binance deal falls through”. 11/9/2022. Yahoo Finance. https://finance.yahoo.com/news/bitcoin-crypto-ftx-binance-contagion-224955324.html

***Gillian Tan. “FTX Hurtles Toward Bankruptcy With $8 Billion Hole, US Probe”. 11/10/2022. Yahoo Finance. https://finance.yahoo.com/news/ftx-hurtles-toward-bankruptcy-8-100849312.html

IMPORTANT DISCLOSURES: 

Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation. 

Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice. 

Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it.  We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. 

Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/.  Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.

Craig Stahlecker

Craig Stahlecker

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IMPORTANT DISCLOSURES:
The information provided is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.

Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Money Coach is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.