AJA Weekly Recap

2023 | November 27

John,

Here is your weekly market commentary. We hope you enjoy receiving our newsletters. If you have any questions about the following content, please let us know!

- The AJA Team

This Week….

  • The Markets
  • Welcome Maya
  • Drip Pricing

The Weekly Focus


Think About It

“It isn't what we don’t know that gives us trouble, it’s what we know that ain’t so.”

 

— Will Rogers, comedian

The Markets

Stocks Gain


U.S. stock indexes climbed for the fourth week in a row as the S&P 500, the NASDAQ, and the Dow posted gains of around 1% in a holiday-shortened trading week. Over those four positive weeks, the S&P 500 was up nearly 11%. 


With a little over a month left in 2023, U.S. growth stocks maintained a big performance gap over their value style counterparts—a sharp reversal from 2022, when value outpaced growth. Through Friday, a U.S. large-cap growth index was up 36.7% year to date on a total return basis; the return for its value-style counterpart was 4.8%


With nearly all third-quarter results in as of Friday, companies in the S&P 500 are expected to post an average earnings gain of 4.3% over the same quarter a year earlier, according to the latest data from FactSet. That result would mark the first quarter of earnings growth since the third quarter of 2022. 


An index that tracks investors’ expectations of short-term U.S. stock market volatility fell for the fifth week in a row. The CBOE Volatility Index on Friday was trading around 42% below a recent peak on October 20. The so-called VIX is down roughly the same amount year-to-date. 


U.S. sales of existing homes in October fell 14.6% from the same month a year ago to the lowest total in 13 years. With interest rates staying high, economists expect that 2023’s existing home sales total could end up being the lowest since 2011. 


Tuesday’s release of minutes from the most recent U.S. Federal Reserve policy meeting showed that Fed officials gave no indications that they were inclined to begin cutting interest rates anytime soon. Members agreed that Fed policies need to stay “restrictive” until data shows a convincing trend that inflation will return to the central bank’s 2% target.


The short-term outlook for U.S. retail sales was mixed as of Black Friday, the unofficial start of the U.S. holiday shopping season. A forecast from the National Retail Federation projects that holiday spending during November and December is likely to rise 3.0% to 4.0% from last year. Such an outcome would lag last year’s holiday sales growth of 5.4%. 


With the next monthly jobs report not scheduled to come out until December 8, Wednesday’s update on U.S. GDP growth is likely to be the most closely watched economic report of the new week. It will be the second estimate of third-quarter growth; the initial estimate released in late October put growth at a stronger-than-expected annual rate of 4.9%, up from a 2.1% figure in this year’s second quarter.


Source: John Hancock Investment Management

Welcome Maya Laws!

We are excited to introduce Maya Laws – our newest team member and Operations Associate here at AJ Advisors. Maya joined us at the beginning of October – you may have already spoken to her on the phone or met her at the office!

 

Maya had four years of experience in event management and operations prior to joining AJA. She loves problem solving, improving our operations efficiency, and making our clients happy! When she's not working, Maya enjoys spending time with friends, exploring Nashville and its hidden gems, or reading a good book (her favorite is Eleanor & Park).

 

Maya has already proven to be a great addition to the team – we know you will enjoy getting to know her too!

Drip. Drip. Drip.

As inflation recedes, fees and charges may continue to affect the cost of some goods and services. Last summer, NPR’s Stacey Vanek Smith reported on the phenomenon after having lunch delivered.


“I decided to splurge and order a burger and fries for delivery. Subtotal for my meal? $14.07. A little pricey, but it’s a good burger and $14 seemed like a totally acceptable price for dinner, especially when it's delivered to my door. Then came the fees: Delivery fee: $5.49; Service fee: $3; Tip: $4; Tax: $1.25. Grand total for my delivery burger: $27.81. My lazy Monday went from costing me $14 to almost $30. The price had doubled. What was going on?”


The answer is drip pricing. It happens when the price of a good or service is broken into multiple components that the buyer becomes aware of as the purchase proceeds, according to an article published by Alexander Rasch, Miriam Thöne and Tobias Wenzel in the Journal of Economic Behavior and Organization


Many industries employ this pricing strategy. For example, travelers may purchase airline tickets by choosing the lowest base price and then find themselves paying additional fees to check bags, select desirable seats or sit in seats adjacent to younger family members.


One luxury automobile company added a new twist to car buying. It asked buyers in the United Kingdom, Germany, New Zealand and South Africa to pay a subscription fee to activate its factory-installed seat warmers. The automaker eventually abandoned the subscription, but it plans to expand pay-on-demand services. In an interview with James Attwood of Autocar, a company board member explained:


“We actually are now focusing with those ‘functions on demand’ on software and service-related products, like driving assistance and parking assistance, which you can add later after purchasing the car, or for certain functions that require data transmission that customers are used to paying for in other areas.”


Inflation and rising prices are critical aspects of retirement planning. If you would like to talk about how inflation may affect your savings and investments over time, please get in touch.

AJ Advisors
www.ajadvice.com

Phone: (615) 709-8709

Fax: (615) 505-3306

eMoney

Charles Schwab

Advyzon

John Stauffer, CFP®
Partner

Andrew Quinn, CFP®
Partner

Emily Triano

Operations Associate


emily@ajadvice.com

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