What August tells us about the market ahead

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Meme Stocks In Vogue Once Again

Asset returns were broadly negative during the seasonally low volume month of August. The Federal Reserve reiterated its commitment to fighting inflation and restoring price stability, despite the economic pain it may bring. Interest rates moved higher throughout the month, as market expectations shifted toward a higher-for-longer federal funds rate.

 

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However, economic data suggested a step down in inflationary pressures, both on the consumer & producer side, leading many to believe peak inflation is in the rearview mirror. The strong Q2 earnings season indicates that fears of the economy being currently in a recession are thus far overblown, though earnings estimates for 2023 have started to be revised downward.

Macro

  • Powell reiterated the Fed’s resolve to restore price stability at Jackson Hole, warning that it will likely result in some economic pain.
  • Q2 Gross Domestic Income (GDI) grew 1.4%, notably higher than the revised Q2 GDP of -0.6%.
  • Jul CPI & PPI came in below expectations at 8.5% & 9.8% y/y and 0.0% & -0.5% m/m, respectively.
  • National gas prices declined from $4.21 on Jul 31 to $3.85 on Aug 31, the lowest levels since early Mar.
  • Consumer confidence rebounded in both the U. of Michigan (58.2 in Aug vs. 51.5 in Jul) & Conference Board (103.2 in Aug vs. 95.3 in Jul) indices.

Equities

  • The S&P 500 initially rallied 4.2% through Aug 16, before declining 8.1% to end the month down.
  • The Q2 EPS surprise rate was +5.5%, with Energy & defensive sectors beating estimates by a higher degree than their cyclical counterparts
  • While value stock returns were similar across size categories, small-cap growth outperformed large-cap growth by 3.8%.
  • International developed markets were weighed down by Europe, as energy prices continue to bruise the region’s economic prospects.

Fixed Income

  • Treasury yields rose 40-60bps across the curve in Aug, as markets priced in the Fed’s hawkish message.
  • Yields between 1 & 7 years rose more than longer-term (10 years and beyond) yields, reflecting an interest rate regime that could keep rates elevated.
  • Jul’s credit spread narrowing continued in the first half of Aug, with HY spreads declining to 4.57% on Aug 11 before widening out and ending the month at 5.22%.

Crypto

  • Bitcoin’s 20-day rolling correlation with the S&P 500 declined in Aug from 0.75 to 0.55, the lowest since Jun.
  • Ethereum’s final testnet merge was successfully executed on Aug 10, setting up Ethereum’s full transition to proof-of-stake in mid-Sept.

Meme Stocks In Vogue Once Again

After taking a backseat to macro headlines, some of the meme stocks came back in vogue. For instance, while volume in AMC picked up, volume in the original meme stock darling GameStop did not. What really drove the surge in volume, though, was Bed Bath & Beyond (BBBY).

 

BBBY short interest as a % of floating shares surged from 18% at the end of Mar to over 43% by the end of Jul. Stocks with higher short interest tend to be more susceptible to short squeezes, which can exacerbate the move in price as short positions need to be covered. This has been the phenomenon in multiple meme stocks and BBBY was no exception in August.

 

Average daily volume of BBBY shares surged to 98 million in Aug, which is more than the number of shares outstanding and ~12x the average daily volume in the prior seven months. Just like other hyperbolic trends though, the fall can be as quick as the rise—the stock is down 59% since Aug 17, though it remains 89% above where it began the month.

Inflation Reduction Act

Inflation Reduction Act

On Aug 16, the Inflation Reduction Act (IRA) was signed into law. According to the Penn Wharton Budget Model (PWBM), it is projected to reduce the deficit by $264 billion through 2031. However, the deficit reduction doesn’t happen steadily throughout the period. In fact, it’s projected to somewhat increase the deficit through 2026 because of increased costs of ACA subsidy extensions & climate/energy-related spending. Major revenue raisers such as drug pricing reform & IRS enforcement revenue don’t ramp up until the latter half of the 10-year period.

 

Because this is a long-term investment & deficit reduction package, it’s unlikely to have much of an impact in the short-term. The PWBM projects that GDP will be 0.1% lower than the previous baseline through 2031, due mostly to debt reduction and the changes to tax policy. They also find that it would have no significant effect on inflation in the short-term, but that inflation would be 0.1% lower midway through the 10-year period.

 

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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

 

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America’s safest cities

 

 

Despite progress overall, crime still impacts America’s communities. Crime and safety are intertwined with prosperity, income and economic opportunity. Crime is costly to individual victims, perpetrators, communities and society at large.

 

MoneyGeek analyzed the most recent crime statistics from the Federal Bureau of Investigation (FBI) to estimate the cost of crime in nearly 300 cities across the United States.

 

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We ranked 297 cities with populations over 100,000 people from most to least safe in this analysis. The following summaries show the safest cities overall, the safest large cities and the most dangerous cities from the analysis and their total and per capita cost of crime. The full data set including the city’s population, cost of crime and crime rates by type of crime are included at the end of this study.

 

There’s an ongoing stereotype that larger cities are more dangerous. While no larger cities (population of 300,000 or more) made the overall safest list, fewer than half of the 15 least-safe cities in the U.S. were large cities.

 

DepositPhotos.com

 

To rank the safest cities in the United States, MoneyGeek started with standardized crime statistics reported to the FBI. The population of each city was added to the analysis to determine crime rates per 100,000 people, and this information was also accessed via data provided by the FBI. When cities with more than 200,000 people did not have data available in the FBI dataset, MoneyGeek conducted individualized research on standardized crime statistics for each specific city.

 

MoneyGeek relied on research by professors Kathryn McCollister and Michael French of the University of Miami and Hai Fang of the University of Colorado Denver to determine the cost of crime to society. We then integrated their findings into the broader dataset to better understand the societal cost of crime within individual cities.

 

To calculate the change in the cost of crime from 2019 to 2020, MoneyGeek analyzed 2019 FBI crime statistics according to the methodology above and compared them with our 2020 analysis results.

 

Lastly, MoneyGeek used data provided via Wikipedia on the number and nature of mass shootings in the United States in 2020.

 

depositphotos.com

 

  • Crime Cost per Capita: $351
  • Violent Crime Rate: 128
  • Property Crime Rate: 1,765
  • Cost of Crime ($000s): $39,401
  • Population: 112,104

 

 

sanse293 / iStock

 

  • Crime Cost per Capita: $348
  • Violent Crime Rate: 159
  • Property Crime Rate: 844
  • Cost of Crime ($000s): $41,435
  • Population: 119,203

 

 

Dmharris26 / Wiki Commons

 

  • Crime Cost per Capita: $326
  • Violent Crime Rate: 180
  • Property Crime Rate: 1,366
  • Cost of Crime ($000s): $34,861
  • Population: 106,855

 

 

yhelfman / iStock

 

  • Crime Cost per Capita: $319
  • Violent Crime Rate: 131
  • Property Crime Rate: 907
  • Cost of Crime ($000s): $70,742
  • Population: 221,932

 

 

James opiyo / iStock

 

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

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lzf/ istockphoto

 

  • Crime Cost per Capita: $311
  • Violent Crime Rate: 127
  • Property Crime Rate: 1,943
  • Cost of Crime ($000s): $36,223
  • Population: 116,442

 

 

KGrif / iStock

 

  • Crime Cost per Capita: $311
  • Violent Crime Rate: 126
  • Property Crime Rate: 1,235
  • Cost of Crime ($000s): $31,103
  • Population: 100,119

 

 

Summersleek / Wiki Commons

 

  • Crime Cost per Capita: $310
  • Violent Crime Rate: 168
  • Property Crime Rate: 1,893
  • Cost of Crime ($000s): $32,062
  • Population: 103,485

 

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LParkerPhotography/istockphoto

 

  • Crime Cost per Capita: $301
  • Violent Crime Rate: 121
  • Property Crime Rate: 1,232
  • Cost of Crime ($000s): $40,693
  • Population: 135,027

 

 

felixmizioznikov /istockphoto

 

  • Crime Cost per Capita: $295
  • Violent Crime Rate: 129
  • Property Crime Rate: 2,045
  • Cost of Crime ($000s): $29,574
  • Population: 100,268

 

 

Glenn Kinyon / Wiki Commons

 

  • Crime Cost per Capita: $276
  • Violent Crime Rate: 97
  • Property Crime Rate: 920
  • Cost of Crime ($000s): $29,844
  • Population: 108,218

 

 

Jphill19 / Wiki Commons

 

  • Crime Cost per Capita: $276
  • Violent Crime Rate: 134
  • Property Crime Rate: 936
  • Cost of Crime ($000s): $57,442
  • Population: 208,335

 

 

Cajarima01 / iStock

 

  • Crime Cost per Capita: $252
  • Violent Crime Rate: 60
  • Property Crime Rate: 1,037
  • Cost of Crime ($000s): $31,970
  • Population: 126,823

 

 

trekandshoot/ iStock

 

  • Crime Cost per Capita: $236
  • Violent Crime Rate: 51
  • Property Crime Rate: 1,499
  • Cost of Crime ($000s): $70,042
  • Population: 297,069

 

 

LagunaticPhoto / iStock

 

  • Crime Cost per Capita: $233
  • Violent Crime Rate: 128
  • Property Crime Rate: 1,068
  • Cost of Crime ($000s): $46,386
  • Population: 199,503

 

 

MatthiasOtt/istockphoto

 

  • Crime Cost per Capita: $227
  • Violent Crime Rate: 126
  • Property Crime Rate: 1,537
  • Cost of Crime ($000s): $27,589
  • Population: 121,304

 

 

Davidhar / Wiki Commons

 

  • Crime Cost per Capita: $218
  • Violent Crime Rate: 86
  • Property Crime Rate: 972
  • Cost of Crime ($000s): $46,412
  • Population: 212,626

 

 

Jerry Ballard/iStock

 

  • Crime Cost per Capita: $214
  • Violent Crime Rate: 49
  • Property Crime Rate: 587
  • Cost of Crime ($000s): $22,068
  • Population: 103,100

 

 

Alejandra Mejia/ istockphoto

 

  • Crime Cost per Capita: $200
  • Violent Crime Rate: 81
  • Property Crime Rate: 1,024
  • Cost of Crime ($000s): $23,540
  • Population: 117,639

 

 

Stephen Batiz/iStock

 

  • Crime Cost per Capita: $195
  • Violent Crime Rate: 66
  • Property Crime Rate: 946
  • Cost of Crime ($000s): $33,968
  • Population: 174,441

 

 

HeavenlyHedgehog / Wiki Commons

 

  • Crime Cost per Capita: $187
  • Violent Crime Rate: 66
  • Property Crime Rate: 164
  • Cost of Crime ($000s): $27,824
  • Population: 149,137

 

 

adamgrandprix / istockphoto

 

Here are the 15 safest large cities and their crime costs per capita:

  1. Virginia Beach, Virginia: $611
  2. Honolulu:$695
  3. Henderson, Nevada:$767
  4. El Paso, Texas: $811
  5. Mesa, Arizona: $901
  6. San Diego: $906
  7. Raleigh, North Carolina: $996
  8. Anaheim, California: $1,077
  9. San Jose, California: $1,100
  10. Santa Ana, California:  $1,109
  11. New York City: $1,204
  12. Austin, Texas: $1,205
  13. Arlington, Texas:  $1,303
  14. Las Vegas: $1,329
  15. Riverside, California: $1,354

 

DepositPhotos.com

 

Here are the 15 most dangerous cities and their crime costs per capita:

  1. St. Louis, Missouri: $11,574
  2. Jackson, Mississippi: $9,138
  3. Detroit: $7,292
  4. New Orleans: $7,214
  5. Baltimore: $7,091
  6. Memphis:$6,884
  7. Cleveland: $6,423
  8. Baton Rouge, Louisiana: $6,150
  9. Kansas City, Missouri: $5,382
  10. Shreveport, Loisiana: $5,153
  11. Milwaukee: $5,049
  12. Dayton, Ohio: $4,907
  13. North Charleston, South Carolina: $4,854
  14. San Bernardino, California:  $4,824
  15. South Bend, Indiana: $4,547

This article
originally appeared on 
MoneyGeek.comand was
syndicated by
MediaFeed.org.

 

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