Stock Market Insights

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They say a “rising tide raises all ships” but in the case of inflation, I don’t know if that’s a good thing.

In the past week, stocks went up but have been feeling inflation pressure. Inflation continues to be the big topic in the stock market in October. Earlier this year the big concern was COVID-19 but with nearly 85% of the US population either vaccinated or having antibodies from being infected (JPMorgan) it seems the actual virus part of the pandemic is becoming less of a threat.

Investors have turned from virus fears to inflation and inventory fears. Lack of available inventory is affecting every company in America. Most significantly because the lack of products is causing the prices of nearly everything to be a lot higher. Purchasing managers across the country are struggling to find products and at the right price so they can sell them at a price that their customers will still be willing to buy.

It’s a surprise to me that consumers are still spending at a high rate. Retail sales for September rose 0.7% an increase from August of 0.9% according to Argus Research. Many analysts predicted that consumer spending would slow down as government stimulus payments ended but that hasn’t been the case.

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Americans have more money in their savings accounts because of earlier stimulus payments and they have been getting raises at work because of competition for workers. Right now, it’s that they have too many customers and not enough goods to sell them. It is a good problem but it is still a problem.

Consumers are expected to spend some of their savings and use some of their higher salaries towards spending for the holiday season in the next few weeks. This will only worsen the shortage of goods in the stores.

Higher salaries and higher amounts in everyone’s savings account are a great thing. But when it happens quickly to everyone, it causes shortages and frustration when people can’t buy what they want to buy.

My parents have told me how frustrated they get when the Social Security Administration announces a cost-of-living increase but then right afterward Medicare raises the monthly cost by nearly the exact amount wiping away any increase in monthly income. The same thing seems to be happening to workers right now. They are getting raises at work but the gas for their car and everything else has increased so much that it feels like they didn’t even get a raise.

In a perfect world “rising tide raises all ships” would only affect income and savings and not the cost of things we buy, but we don’t live in a perfect world. The market is watching this and is hoping consumers continue to be patient and buy their products. I think they will.

Have a blessed week!

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary, therefore, the information should be relied upon only when coordinated with individual professional advice. Past performance is no guarantee of future results. Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., 7th Floor, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated. Dr. Baker has attained his D.Min., the designation for Doctor of Ministry, and his AIF®, the designation for Accredited Investment Fiduciary®.

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