- September was a tough month for the stock market with the S&P500 dropping 4.8%. This was the worst monthly performance since March 2020 when the market fell due to the covid pandemic. Yet, the stock market could potentially recover in the final three months of the year. Since 1950 the fourth quarter has seen stocks rise 79% of the time with an average gain of 4%.
- A recent survey showed that 51% of small restaurants could not pay their rents last month (up from 40% in July). These business owners are struggling to maintain normal operations with rising food prices, increasing wages, and supply chain bottlenecks. Employment in sit-down restaurants is still 500,000 jobs below pre-pandemic levels.
- From January through the end of August , investors have poured $47 billion into TIPS centered ETFs and mutual funds compared to just over $8 billion for the same time period in 2020. This follows the realization that the CPI was up 5.3% year-over-year, the highest level of inflation in 13 years.
- In September US domestic flight bookings were up 82% from a year ago. This is leading some investors to expect a price increase in airline stocks. While that price jump may happen, airlines still face longer-term headwinds: 1) bookings are still 52% below pre-pandemic levels 2) only 47% of people say they are comfortable flying now - down from 60% this summer 3) business travel still hasn’t picked up and 4) workers are harder to attract and more expensive to pay due to higher wages.
Barrons – History Says Expect a Strong Fourth Quarter. History Can Be Wrong.
Bloomberg – Restaurants’ Fragile Recovery Is Fizzling in the U.S.
WSJ – As Inflation Fears Grow, Investors Flock to TIPS
Barrons – Airlines May Get a Business-Travel Boost. Buy Shares, but Don’t Hold Them for Long.
Economic Calendar
Monday: Factory orders (Aug)
Tuesday: Trade deficit (Aug), Markit services PMI (Sept), ISM services index (Sept)
Wednesday: ADP Employment (Sept)
Thursday: Consumer credit (Aug)
Friday: Non farm payrolls (Sept), Unemployment report (Sept), Average hourly earnings (Sept)