Jobs Data Is Strong
What is it?
Data came out last Thursday pointing towards a strong labor market.
“ADP private-sector payrolls came in well above estimates. Meanwhile, other reports found that layoffs slowed and jobless claims remained relatively low.”*
Why does it matter?
While the data may sound good it could have harsh implications. Investors took the strong labor market as a sign that the Fed is more likely to raise interest rates.
“Markets are now seeing a 95% chance of a hike at the Fed’s July meeting.”*
Fed officials seemed to be more hawkish than expected as most mentioned more rate cuts would be needed to lower inflation.*
Investors Find a new Favorite
What is it?
“Retail traders raised their exposure to U.S. stocks in June encouraged by healthy returns, with their focus shifting to electric-vehicle firms from artificial intelligence stocks earlier in the year. Record vehicle deliveries by Tesla, consistently a favorite among the retail crowd, have helped spark small-time investors’ interest in EV stocks, including Rivian.”**
Why does it matter?
“’While it may be difficult to see a further increase in the pace of cash equity purchases from these levels, there is still room for more speculative buying in the options space,’ said Marco Iachini, senior vice president at Vanda Research that tracks retail flows.”**
While stocks have been performing well that is not a good reason to go all in. Many investments are signaling overbought. So while some may be buying to capitalize on the recent up moves, others may be selling to take profits on their positions. If you’re the last to speculate on a recent up move you could get stuck holding the highest share price as values come back down to more rational levels.
We are not looking to be greedy as some of our positions are already up. When stocks are overbought like this we tend to reduce exposure while being selective on what we buy more of. While electric vehicles are performing well in the markets their move may be short lived. Even though we plan on investing in EVs for the long term, we may be patient for a more favorable opportunity to buy more as prices have already jumped up recently.
Other articles we found interesting this week:
Should You Buy META Stock on Threads App Launch?
Investors are waiting for a consumer collapse
Stocks mixed with inflation data in focus
Current 401(k) portfolio
Our last 401(k) 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.
Click here for more details about our investment management
Sources:
*Karen Friar and Josh Schafer. “Stocks slide as fresh jobs strength adds to Fed hike consensus”. Yahoo Finance. 7/6/2023. https://finance.yahoo.com/news/stocks-slide-as-bets-build-for-fed-hike-in-july-stock-market-news-today-181309676.html
**Medha Singh. ”Retail traders pile into US stocks; focus shifts to EVs from AI”. Reuters. 7/6/2023. https://www.reuters.com/business/retail-consumer/retail-traders-pile-into-us-stocks-focus-shifts-evs-ai-2023-07-06/
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.
