Despite a dip mid-month August stock markets rallied to close yet another positive month. The average returns of the two large cap indices was 1.56% for August, adding to the steady gains over the past year. Stocks rose over all sectors except energy last month with financials and tech leading. Bonds were very slightly down since July. Diversified portfolios lag stocks in a strong stock market, held back by bond positions.
Wage inflation is a goal of the Federal Reserve and Treasury, relating the growth in wages as good for the economy. The “bond taper” by the Federal Reserve means that they will gradually reduce the amount of loans they buy monthly from banks to keep money moving in the economy. The bonds become assets of the Reserve. Since 2008 these assets have accumulated to over $13 trillion. These assets funded the benefits that stabilized the economy through the pandemic. So far, higher wages are not reducing profit margins because companies are growing, that is, the “pie” is getting larger. The Federal Benefits Boost ends on Labor Day. States that kept the benefits over the summer have stronger economies and job growth than those that withdrew those benefits early. The end of stimulus benefits may cause a temporary market dip if causes consumer spending to slow.
Client meetings at Lechner Associates continue to be offered over the phone or online as well as in person, however you prefer. We thank you for your loyalty and friendship. It is our privilege and our pleasure at Lechner Associates to work with you toward your goals.
September’s lingering warm days and cool nights ease us out of summer excesses. The repeat of devastation for those in the Gulf coast states by hurricane Ida and west coast heat and drought and wildfires change the face of summer for much of our country. Here the birds raise their young and prepare for winter migrations as usual. The gardens grow and bloom and fruit with abandon. Part of us is ready to resume the routine of scheduled life. Another part is ready to celebrate abundance. Yet another part aches for all the suffering at this time.