Friends,

Domestic equity markets bounced back in October recouping losses recorded in September. All three major US Equity Indexes closed at respective new all- time highs. Both the Nasdaq 100 and S&P 500 were up in excess of 7%. Foreign markets underperformed relative to domestic markets recording gains of approximately 3-4%. The S&P 500 is now up 24% for the year. After declining almost 34% during the pandemic sell off last year the S&P 500 is now up over 110% from the lows.

Once again Crude Oil was up almost 12% in October touching a 7-year high close to $83 a barrel. As we talked about in our September newsletter, home heating costs will be appreciably more expensive than last year. This could lead to a significant reduction is discretionary spending in the winter months.
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Most inflation indicators have reached their highest level in years. Surging energy prices, labor shortages and supply chain disruptions have contributed to a significant jump in US GDP Price increases. The chart below measures quarter on quarter price changes for products included for Gross Domestic Products.

SOURCE: BLOOMBERG

Given the magnitude of this increase, we anticipate increased volatility in both stock and bonds prices. The Federal Reserve still feels this increase in Inflation is “transitory”, but we will continue to watch this indicator closely. Prolongated inflationary pressures could weigh on the bond market which has already seen yields increase significantly over the last year.
As always if you have any questions feel free to reach out.

Best,
Bob

This material is intended for general public use and is for educational purposes only. By providing this content, Park Avenue Securities LLC is not undertaking to provide any recommendations or investment advice regarding any specific account type, service, investment strategy or product to any specific individual or situation, or to otherwise act in any fiduciary or other capacity. Please contact a financial professional for guidance and information that is specific to your individual situation. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. The Hang Seng Index is a free float-adjusted market-capitalization-weighted stock-market index in Hong Kong. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Each company's security affects the index in proportion to its market value. Indices are unmanaged, and one cannot invest directly in an index. Past performance is not a guarantee of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit and inflation risk. Equities may decline in value due to both real and perceived general market, economic and industry conditions Opinions expressed are those of the author and not necessarily those of Guardian or PAS. 2021-124911 Exp 8/22