March Market Review

April 1, 2022

Dear Clients and Friends,

Global equities experienced volatility throughout March, though a late rally softened some of the sharper losses from earlier in the month. The volatility of recent months continued, driven by geopolitical events that I believe are unlikely to dissipate soon, a more hawkish Federal Reserve (Fed) and higher prices. As expected, the Federal Open Market Committee raised the federal funds rate 25 basis points at its March meeting and indicated that further increases will be needed to return inflation to its 2% goal. Chair Jerome Powell reiterated the central bank’s commitment to curbing inflation, signaling that coming rate increases could be larger if warranted.

Despite headwinds, the general economic backdrop remains favorable, notes Raymond James Chief Investment Officer Larry Adam. U.S. consumers, flush with cash, continue to spend despite rising prices; manufacturing and business spending remain healthy; and the labor market remains robust.

The broad-market S&P 500 ended the month up 3.58% and the Dow Jones Industrial Average is up 2.32%, just 5.55% and 4.27% respectively off their record highs. Let’s look at the numbers for the first quarter:

Oil’s outsized impact

The Russian invasion of Ukraine has lifted oil prices globally, likely dampening the pace of growth in the near term, explains Chief Economist Scott Brown. As a result, inflation has remained elevated, reflecting higher energy prices, ongoing supply and demand imbalances related to the pandemic, and broader price pressures. The potential consumer impact drove Washington policymakers to focus on domestic economic policy, which may offer support for a reconciliation bill that invests in broad domestic energy production and enhances domestic manufacturing capability.

The war serves as a stark reminder of the importance of energy security, particularly in Europe, which imports one-third of its oil and gas from Russia. I believe that the need for a more viable long-term strategy should reinforce a shift toward wind, solar, energy efficiency and electric mobility.

Bottom line

Overall, I believe that volatility tied to geopolitical risk is likely to persist over the medium term and adds complexity to the global economic outlook. Despite uncertainty, the U.S. economy looks to have room to grow, and higher equity prices seem likely. Earnings trends remain solid and valuation multiples have become more compelling. In addition, I believe that higher Treasury rates coupled with wide spreads and increased municipal/Treasury ratios should bode well for income buyers in both the corporate and municipal markets. We are constructive on equities and believe investors should view temporary choppiness as a buying opportunity. 

As always, I’ll be sure to keep my eyes on the markets and relay anything relevant. If you have any questions, please feel free to reach out at your convenience. Thank you for your confidence in me.

Sincerely,

Matt Goodrich, Financial Advisor

President, Goodrich and Associates, LLC

Branch Manager, RJFS

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small-cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Small-cap securities generally involve greater risks. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation, and may not be suitable for all investors. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.

 Material prepared by Raymond James for use by its advisors.

The Real Cost of Free Apps and Services

Technology and Innovation

Learn how to protect your personal information when you are using free services.

You may use “free” apps for online shopping, email, cloud storage, and social media without really thinking about why those services are “free.” They are most likely free because they are harvesting and selling data about you, such as your preferences, age, race, marital status, interests, and location, among other things. These businesses sell user data to advertisers, who use that data to direct targeted advertisements to you based on your interests and online activity. For example, if you browse for shoes online, you may see ads for shoes on other sites you visit for a while after that.  If you use a free site or app that finds promotional codes for you to apply at checkout, it may be collecting and selling the data that you share.

What is the harm in this?

While some may feel uncomfortable with targeted advertisements, others may like when advertisers connect them to products and services that align with their interests. So, what is the harm? It is that information you wish to keep private may never actually be private. When you search the web on a free service, your activity may be broadly tracked—including, for example, searches related to a medical condition you don’t want others to know about—and shared with third parties.

In addition, many social media companies collect your data and then sell it, or even use it, for purposes you may not be entirely aware of. Think back to the Cambridge Analytica scandal in 2018, where millions of people were unaware of their Facebook data being harvested for political advertisements. Social media posts can also include photos or information about others who have not consented to the publication of their information (for example, children or friends who do not have social media profiles). Digital marketing companies will combine this information to build a robust digital profile—a centralized collection of everything they know about you, your friends, and your family—and sell it to a number of sources. Do you have the right to make those choices for your friends and family?

What can I do?

Determine whether you want to use a particular free app or software in exchange for your personal information. Here is what you can do to help come to a decision:

• Do not click on links for free apps. Independently search for the app in your device’s app store.

• Read the Privacy Notice and Terms of Use. These documents describe how the company uses your data, such as whether they share your information with third parties.

• Figure out where the company is located and where your data is stored because data rights vary among countries (and in some cases, states). Once you know the location of the company and where your data is stored, look into the data rights you may be afforded (such as the right to request deletion of your data).

• Manage your settings and preferences. If you do not want your data shared with third parties, check the privacy settings of the app or software to see if you can opt out of data sharing, activity tracking, or interest-based ads. Keep in mind that opting out of sharing does not mean you will not get ads, just that your information will not be shared for the purpose of personalized ads.

• Consider an alternative if you are not comfortable with using a particular app or software. For example, could you switch to an email provider that does not scan your emails for advertising? Do you want to pay for a service to avoid targeted third-party ads? How a company uses your data ultimately comes down to its privacy policy, but the company will have more incentive to protect their relationship with you if you are paying for its service.

• For online holiday shopping, stick with trusted websites and, if possible, work directly with the primary vendor. Before using a promo code site, consider whether that discount is worth the price of your data privacy.

As you may have heard time and again, if you are not paying for it, you are not the customer; you are the product. It’s always a responsible practice to be intentional with the types and amount of personal information you share, and to question a service that seems “too good to be true.”

Inflation Games

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

March 28, 2022

Inflation is a political lightning rod. As a result, there is a good deal of misconception around it. The Consumer Price Index (CPI) is up 7.9% from a year ago and will likely peak in the 8.5 - 9.0% range sometime in the next couple of months, the highest since 1981. Politicians blame war, or COVID, but the simple explanation is just too much money creation.

Others think inflation will be temporary and point to “core” inflation, which looks tamer. Core prices, which exclude the normally volatile food and energy sectors, are up 6.4% versus a year ago and will likely peak near 6.5%.

There is a reason to exclude some prices when there are very special factors at play…but food and energy prices have been going up for over a year. And just because more of the inflationary impact of the surging M2 measure of money (up more than 40% since the start of COVID) shows up in food and energy prices, or even used car prices, isn’t a reason not to count them.

Others argue that the government is grossly underestimating inflation and is hiding the scope of the problem. One on-line analyst says that if we used the pre-1980 methodology to measure inflation it’s already running north of 15%. But there are serious problems with this analysis, as well.

First, the same method suggests inflation has been running close to 10% per year on average since 2000. This is bonkers. If inflation really had been running close to 10% per year, a true measure of real GDP growth would show the US to have been in recession since 2000. Seriously?!?

Second, why would anyone use the basket of goods and services that Americans were buying in 1980 to measure inflation today? Energy used to be a much bigger share of our spending. Meanwhile, smartphones, by themselves, have replaced spending on a wide variety of products and services. Stereos, records, video recorders, radios, landline phones, clocks, watches, maps, cameras, calculators,…etc. The list goes on and on and keeps getting longer. Today, even poor Americans have access to products and services that the wealthy of prior generations never could have bought at any price.

Third, yes, the government has changed the way it measures home prices, but it’s for the better. When people buy a home they are buying an asset, just like when they buy stocks or land. The CPI is designed to measure the cost of consuming goods and services, not the cost of possessing an asset. When it comes to home inflation, the government changed the measure to look at rents, not the price at which homes are sold, because rents are the cost of consuming the value of homes.

The government figures on inflation are not perfect. The main ones are the CPI, the PPI, and the PCE Deflator (the Fed’s favorite!). All of them measure slightly different things and so the numbers are different, as well. But the inputs and methods to make these calculations are publicly available. There is not a conspiracy to dupe the American people. And every government measure of inflation is up. It’s pretty clear the Fed is going to have trouble wrestling inflation back down.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

3-30 / 7:30 am Q4 GDP Final Report 7.0% 7.1% 7.0%

7:30 am Q4 GDP Chain Price Index +7.1% +7.1% +7.1%

3-31 / 7:30 am Initial Claims – Mar 26 195K 195K 187K

7:30 am Personal Income – Feb +0.5% +0.5% 0.0%

7:30 am Personal Spending – Jan +0.5% +0.5% +2.1%

8:45 am Chicago PMI – Mar 57.0 59.2 56.3

4-1 / 7:30 am Non-Farm Payrolls - Mar 490K 435K 678K

7:30 am Private Payrolls – Mar 496K 445K 654K

7:30 am Manufacturing Payrolls – Mar 30K 25K 36K

7:30 am Unemployment Rate – Mar 3.7% 3.7% 3.8%

7:30 am Average Hourly Earnings – Mar +0.4% +0.4% 0.0%

7:30 am Average Weekly Hours – Mar 34.7 34.7 34.7

9:00 am ISM Index – Mar 59.0 58.7 58.6

9:00 am Construction Spending – Feb +1.0% +0.9% +1.3%

afternoon Total Car/Truck Sales – Mar 13.9 Mil 12.7 Mil 14.1 Mil

afternoon Domestic Car/Truck Sales - Mar 10.8 Mil 9.5 Mil 10.9 Mil

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

What the Fed "Should" Do

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

March 21, 2022

Normally when we write about public policy – monetary policy, taxes, spending, trade, and regulations – we mainly focus on what we think policymakers will do and the likely effects on the economy or the financial markets. For example, we now think the Fed is on a path to raise rates gradually and persistently throughout 2022, with some possibility of a rate hike of a half a percentage point along the way, as well.

But this is a far cry from what we think the Federal Reserve should do.

The Fed is well behind the curve and – in spite of raising rates by 25 basis points last week – is only getting further behind in its fight against inflation. Yes, a higher target shortterm rate is an improvement in policy. But that’s because it is falling behind the inflation curve at a slower rate, not because it’s actually catching up.

At present, the futures market in federal funds appears split roughly 50/50 on whether the Fed will raise rates by 25 or 50 bp in May. Instead, we think the Fed should raise shortterm rates to 2.0% and do it immediately. Like today.

In addition, the Fed should announce that the hurdle for an additional change to rates in the next six months is high and it will reduce its balance sheet by $100 billion per month starting as soon as possible, not only by not rolling over maturing securities but also by outright selling longer-dated securities. That pace would double the peak pace of Quantitative Tightening from the prior cycle back in 2017-19.

No, we are not being cavalier about these suggestions, nor are we making them to get attention. Instead, it’s the Fed that’s been cavalier about inflation risk and now has the financial markets and economy in a position where we have to obsess over its every move. Consumer prices are up 7.9% in the past year and the year-ago comparison will likely peak somewhere around 9.0% in the next couple of months. The M2 measure of the money supply has grown more than 40% since COVID started and signals persistently high inflation for years to come.

Yes, we are well aware that, the Fed not having prepared the financial markets for a sudden move to 2.0%, there may be some temporary significant losses for some investors, particularly in equities. But, once digested, we think this dramatic move in monetary policy should be good news whether you are a hawk or dove on monetary policy.

If you’re a hawk, the attraction is obvious: the Fed is finally on the ball and more likely to get inflation under control. But we also think a dramatic move in policy should appeal to doves. Even the most dovish policymaker at the Fed is forecasting a short-term interest rate of around 2.0% in late 2023 and late 2024 (according to the “dot plot” released last week). Getting to 2.0% more quickly might open the door to staying there (or above) for a shorter amount of time.

It’s also important to note that the median policymaker at the Fed expects the short-term interest rate target to average about 2.0% for the next three years. In other words, the Fed would just be placing the short-term rate right about where it’ll be anyhow and then taking the next several months to assess where it needs to go next.

We think that after pausing for several months, the Fed would eventually realize it needs to do more. But, if we’re right, that means by having swiftly proceeded to 2.0%, the Fed would have less work to do than if it were to gradually meander rates upward over the next several months.

A target rate of 2.0% would not be high by historical standards. It would still be very low relative to current inflation and even low versus the future inflation expectations embedded in the prices of Treasury securities. Raising the short-term rate to 2.0% would not invert the long end of the yield curve; the 10-year Treasury is yielding 2.2% (as of Monday morning).

There is a time and place for gradualism in monetary policy, particularly when the unemployment rate is still above normal or when inflation is only a little above the Fed’s longterm target. This is not that time and place. The Fed’s monetary policy mistakes of the past two years have accumulated to a point where they equal those of the 1970s. Small policy shocks today will save us from even bigger ones down the road. But it takes intestinal fortitude.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

3-23 / 9:00 am New Home Sales – Feb 0.810 Mil 0.815 Mil 0.801 Mil

3-24 / 7:30 am Initial Claims – Mar 21 211K 211K 214K

7:30 am Durable Goods – Feb -0.6% -1.5% +1.6%

7:30 am Durable Goods (Ex-Trans) – Feb +0.6% +0.8% +0.7%

3-25 / 9:00 am U. Mich Consumer Sentiment- Mar 59.7 59.7 59.7

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Powell Channels Volcker

First Trust Economic Research Report

Brian S. Wesbury - Chief Economist

March 16, 2022

As expected, the Federal Reserve raised short-term rates by one quarter of a percentage point (25 basis points) earlier today, the first rate hike since the end of 2018. Even more important, the Fed signaled a new level of hawkishness in terms of future rate hikes as well as Quantitative Tightening.

The ”dot plot,” which show the pace of rate hikes anticipated by policymakers, suggests the median Fed official thinks short-term rates will go up 1.75 percentage points this year, which would be consistent with one 25 bp rate hikes at each and every meeting for the remainder of the year. This would also be consistent with the new language in the Fed’s statement that it anticipates rate hikes will be “ongoing.” Notably, this would also mean the Fed is prepared to keep raising rates through the mid-term election season, without pausing.

In addition, the median “dot” suggests another 75 - 100 bp in rate hikes in 2023, which would take short-term rates to a peak of about 2.75%. That, in turn, is slightly above the median estimate for the average short-term rate over the long run. In other words, the Fed now thinks it’ll overshoot on rates, although not by much.

But the Fed didn’t only change policy on rate hikes, it also shifted earlier the timing on Quantitative Tightening by saying it “expects to begin reducing [its balance sheet] at a coming meeting.” It looks like the Fed will start QT in May unless the economy runs into some unexpected headwinds. Notably, Powell said at the press conference that QT will be faster than it was back in 2018-2019. The fastest pace in that cycle was $50 billion per month. Look for a pace of around $75 – 100 billion per month in this cycle.

The dramatic turn in the projected pace of rate hikes and the earlier schedule for QT was accompanied by some big changes to the forecast for the economy this year. Expected real GDP growth was downgraded to 2.8% from 4.0%, while expected PCE inflation was lifted to 4.3% from a prior estimate of 2.6%. However, the real GDP growth forecast for 2023 and beyond wasn’t changed and the upward revisions to the inflation forecast for 2023-24 were modest.

Is the Fed worried that removing accommodation will cause a recession? Not yet. At the post-meeting press conference, Powell said that the odds of a recession are not “elevated” over the next year and the economy can “flourish” even as the Fed becomes less accommodative. Powell thinks he can engineer a “soft landing.” We will see. He is likely right about 2022, itself. A federal funds rate below 2.0% is not tight. But wrestling inflation down to 2.0% is going to be tough to do without the Fed eventually getting tight enough to cause a recession.

This does not mean it’s time to get bearish on equities. Economic growth continues, corporate profits are very high, and long-term interest rates, although they’ve moved up recently, are still low enough to make equities relatively attractive. In a better world, the Fed would operate in the background and investors could ignore it. Unfortunately, for the time being, investors are going to have to pay attention to the direction and pace of changes to monetary policy.

We believe today’s policy shifts are long overdue. Consumer prices rose 7.0% last year and the year-ago comparison should peak near 9.0% sometime in the next month or so. The Fed is well behind the curve and has its work cut out for it.

Brian S. Wesbury, Chief Economist

Robert Stein, Deputy Chief Economist

Text of the Federal Reserve's Statement:

Indicators of economic activity and employment have continued to strengthen. Job gains have been strong in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures. The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Esther L. George; Patrick Harker; Loretta J. Mester; and Christopher J. Waller. Voting against this action was James Bullard, who preferred at this meeting to raise the target range for the federal funds rate by 0.5 percentage point to 1/2 to 3/4 percent. Patrick Harker voted as an alternate member at this meeting.

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Fed Raises Interest Rates for First Time Since 2018

Markets and Investing

March 16, 2022

Scott Brown - Chief Economist

The Fed raised interest rates for the first time since December 2018 and a majority of Fed officials expect at least another 150 basis points in rate hikes for 2022.

Click here to view the video commentary

As widely anticipated, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate (the overnight lending rate) by 25 basis points (bps) to 0.25-0.50% at its March meeting. The FOMC cited elevated inflation and strengthening employment. The conflict in Ukraine will have a “highly uncertain” impact on the U.S. economy, according to the FOMC, but will likely dampen growth and add inflation pressures.

“While this rate increase was anticipated,” said Raymond James Chief Economist Scott Brown, “the Fed signaled a higher path for interest rates than the market expected.”

Twelve of 16 senior officials anticipate seven or more rate hikes this year.

“The Fed expects inflation to moderate in the months ahead,” Brown said, “but if not, it is prepared to raise rates more aggressively down the line.”

The median forecast of senior Federal Reserve officials for 2022 for GDP growth fell from 4% (in December) to 2.8%.  The median forecast of inflation rose from 2.6% to 4.3%. Headline consumer inflation was 7.9% in the 12 months ending in February.

Raymond James Chief Investment Officer Larry Adam accurately predicted Powell would instead raise rates 25 bps at this meeting, although sentiment at the time leaned toward 50. Adam believes 25-bps increases will allow the Fed the flexibility to monitor the effect of increased rates on the economy.

“On average, after the first Fed tightening [cycle], the economy tends to expand for an additional five years,” said Adam on February 22. “With this economic expansion only two years old, we believe the Fed has every incentive to make sure it steers us clear of a recession.”

Adam did note that high energy prices may cramp consumer spending and push the Fed to act more aggressively. Brown believes the conflict in Ukraine could dampen growth and lead to higher inflation, which would also push the Fed to take action.

Officials continued to work on a plan to start reducing the Fed’s $9 trillion balance sheet, expected to begin in the months ahead.  Details of that discussion will be included in the policy meeting minutes, to be released on April 6. The next FOMC meeting is scheduled for May 3-4.

 All expressions of opinion reflect the judgment of the Chief Investment’s and Chief Economist’s Offices, and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

© 2022 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2022 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

It's the Money

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

March 14, 2022

With every passing month, politicians and economists try to blame inflation on anything but excess money growth. As inflation gets worse, just like the 1970s, the list of excuses for inflation grows longer. At the start of the year, politicians on the left were blaming higher inflation on greedy companies; now they’re blaming Putin. Meanwhile, politicians on the right started out blaming higher government spending and bigger budget deficits; now others are blaming unfavorable demographics and de-globalization.

Among all these excuses we think the silliest is that inflation is caused by greedy companies. Businesses are no greedier today than they were before COVID.

As to Putin, the Russia-Ukraine War has caused a temporary spike in prices for oil and other commodities. Consumer prices rose 7.0% in 2021. But, in the next couple of months, we could see consumer prices up about 9.0% from a year ago. So, let’s say we can temporarily blame Putin for up to an extra two points of inflation, which should hopefully unwind later this year. That still leaves a big inflation problem that existed before Putin ordered the invasion of Ukraine and, we think, will continue even if the invasion (hopefully) ends.

Some voices on the political right are saying inflation will continue in advanced countries because of the aging of the Baby Boom generation mixed with low fertility as well as de-globalization. The idea is that fewer workers in the advanced world plus less willingness to extend supply chains to countries with lower-paid workers mean higher costs for businesses, which will have to be passed along to consumers.

We have no doubt that an economic environment in which labor is becoming (relatively) scarcer is prone to higher inflation if central banks ignore this issue when setting monetary policy. But these phenomenon – retiring Boomers, low fertility, de-globalization – are not hidden or some sort of secret. If they’re obvious enough for some economists to develop theories about how they’ll affect inflation, then they’re also obvious enough for central bankers to adjust monetary policy so that higher inflation doesn’t result.

But what that would require is for central bankers to dust off the writings of Milton Freidman, the same writings they’ve been casually dismissing the past two years as the M2 measure of the money supply has soared.

It is ultimately the increase in the money supply that’s responsible for inflation. It doesn’t matter whether government spending or the budget deficit is high or low, whether the labor supply is growing or shrinking, whether free trade is waxing or waning; inflation is based on decisions made by central banks. If the money supply grows too fast, you get more inflation; if the money supply grows too slowly or shrinks, you get deflation. If the central bank does its job right, you get stable prices.

Which is why we suspect inflation is going to keep exceeding the Federal Reserve’s supposed 2.0% long-term target for a long time to come. The money supply is still growing rapidly and the Fed is just getting around to its first modest rate hike (most likely 25 basis points) later this week. It is nowhere close to being tight and tight it will have to get in order to tame the inflation it’s unleashed.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

3-15 / 7:30 am Empire State Mfg Survey - Mar 6.5 19.9 3.1

7:30 am PPI – Feb +0.9% +0.9% +1.0%

7:30 am “Core” PPI – Feb +0.6% +0.6% +0.8%

3-16 / 7:30 am Retail Sales – Feb +0.4% +0.3% +3.8%

7:30 am Retail Sales Ex-Auto – Feb +0.9% +1.9% +3.3%

7:30 am Import Prices – Feb +1.6% +1.3% +2.0%

7:30 am Export Prices – Feb +1.2% +1.1% +2.9%

9:00 am Business Inventories – Jan +1.1% +1.1% +2.1%

3-17 / 7:30 am Initial Claims – Mar 12 220K 221K 227K

7:30 am Housing Starts – Feb 1.700 Mil 1.699 Mil 1.638 Mil

7:30 am Philly Fed Survey – Mar 15.0 24.7 16.0

8:15 am Industrial Production – Feb +0.5% +0.6% +1.4%

8:15 am Capacity Utilization – Feb +77.9% 78.0% 77.6%

3-18 / 9:00 am Existing Home Sales – Feb 6.100 Mil 5.970 Mil 6.500 Mil

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

COVID-19 Tracker

First Trust Economics

Brian S. Wesbury - Chief Economist

March 4, 2022

COVID-19 was not a hoax, but it was the world’s first Social Media pandemic, where fear was spread in a way we have never seen before. Our goal with the COVID-19 Tracker was to provide a data driven piece to put the pandemic in perspective.

The information we presented was used by the White House, Congress, the press, educational institutions from universities to high schools, and of course, the Financial Advisor community. The reason we think it was so widely used was that we presented factual data in a way that helped minimize fear.

What this data has consistently shown since the beginning of the pandemic was that those most at risk were a small subset of the population. Those 65 years and older make up only 16.3% of the population, but have accounted for nearly 75% of all COVID-19 deaths as of 3/2/2022.* In our opinion, focusing resources on the most vulnerable individuals, instead of locking down the entire country, would have resulted in better outcomes from both a public health and economic perspective. As history looks back, we believe locking down the economy will be viewed as one of the most damaging public policy mistakes in world history.

The shutdowns destroyed supply chains, put millions out of work, hurt the young by eliminating in-person learning, damaged mental health, caused the delay of important screenings for other health problems, and led to a government spending spree of over $5 trillion. We are now dealing with the costs of those shutdowns and while we can’t assess the long-term sociological problems, we do know that the economic data continues to improve. You can follow our weekly Recovery Tracker here.

The U.S. and other western countries have seen case counts from the Omicron wave of COVID-19 collapse over the past several weeks, and it now looks clear that the worst of this wave of the virus is behind us. As a result, and in conjunction with widespread population immunity due to vaccination and prior infection, restrictions are starting to be removed at a rapid rate around the world. It’s important to remember that seasonality plays a big part in the spread of this virus, and cases could always rise once again, but for now it looks like the status quo of lockdowns, mask mandates, vaccine passports, etc. over the past two years may be coming to an end.

The lagging effects of the draconian response to this pandemic will continue to be felt for years to come as will the long-term economic consequences from government spending and money printing. But it seems clear that confidence is returning, the pandemic is waning and the economy continues to recover. As a result, we have decided it’s time to end the First Trust COVID-19 Tracker. This final Tracker is two pages. We hope you found our Tracker a port in the COVID-19 storm.

Click here to view the final report.

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Will Russian Sanctions Lead China to Sell US Debt?

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

March 7, 2022

Russia’s invasion of Ukraine led western nations to impose the most draconian economic sanctions in the modern era. The Russian stock and bond markets have collapsed, along with Russia’s currency, the ruble.

Many investors fear that China, which has always wanted control of Taiwan, will use the mayhem of the moment to take it. Obviously, this would create even more uncertainty and mayhem, but China is more involved in global finance than Russia. The West’s response to Russia has not gone unnoticed, but many fear that even if China doesn’t invade, it may preemptively sell its roughly $1.1 trillion in US government debt to avoid financial retaliation. The fear is that this will cause US interest rates to soar and the US economy to suffer.

We think this fear is unwarranted. Yes, inflation and Fed tightening are likely to push up rates in the next few years. This is what the markets should focus on, not a Chinese sell-off of US Treasury debt, which would have little impact.

First, total US debt is roughly $30 trillion. If China sold all its debt, it is only 3.6% of all outstanding US debt. A shock to the system maybe, on the day it happens, but just a temporary shock, not a death blow.

Second, consider what’s happened to our budget deficit the last couple of years. Right before COVID, the Congressional Budget Office estimated that the baseline deficits for Fiscal Years 2020 and 2021, combined, would be a two-year total of $2.0 trillion. Instead, due to COVID and related shutdowns, the two-year deficit totaled $5.9 trillion. That’s $3.9 trillion in extra deficits over a two-year period. And the 10-year Treasury yield is essentially where it was right before COVID hit.

Third, the Federal Reserve shrunk its balance sheet by almost $700 billion (effectively selling debt securities) in 2018 and the first eight months of 2019. Guess what? Interest rates fell.

Fourth, even if rates were to rise, which looks likely no matter what China does, the US economy has rarely been as insensitive to interest rates as it is today. Due to underbuilding going back a decade, there are too few homes in the US. Even if mortgage rates go up, we need more new homes. Higher interest rates might mean a greater appetite for renting versus buying, but rental units have to be built, too. Meanwhile, auto sales are very low due to supply-chain issues. As those issues gradually get resolved, auto sales should increase even if interest rates go up.

Fifth, we anticipate another round of Quantitative Tightening starting mid-year that will eventually be more aggressive than it was in 2018-19, maybe reducing the balance sheet by $100 billion per month. If we’re right, that would mean one year of peak QT by the Fed is even more debt being sold than all the debt China owns. And yet, the 10-year yield is still 1.8%. We know the Quantitative Tightening isn’t an exact equivalent to China selling debt. But the comparison still puts the size of a potential China selloff in perspective.

Sixth, it’s important to remember that China didn’t buy our debt as a favor to the US; they bought our debt out of self-interest. Using Treasury debt to back up their currency makes people more willing to use the renminbi. If China’s government sells its Treasury debt, that appetite for the relative safety of the dollar won’t disappear and citizens in China could offset this sale by buying more dollar-denominated assets.

Seventh, and most important of all, we need to recognize that interest rates are a function of economic fundamentals and expectations about the future, not who is buying and selling how much Treasury debt on any particular day.

If China sells its Treasury debt, it’s going to end up getting dollars in return. What will it do with those dollars? Swap them for a different currency…let’s say Euros? Then whomever it swaps with will have the dollars. What will they do with those dollars? If China’s sales of bonds drive up rates, whoever gets the dollars would likely turn around and buy US bonds. The result? No fewer dollars or bonds in the world.

The US debt that China owns is more problematic for China than it is for the US. Moreover, if China sells US debt because it fears sanctions, then it will likely sell European debt as well. In the end, it’s not the US that has a problematic conundrum.

China invading Taiwan would be a horrible event. But the fear of China hurting our economy by selling our debt is overblown.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

3-7 / 2:00 pm Consumer Credit– Jan $24.5 Bil $20.7 Bil $18.9 Bil

3-8 / 7:30 am Int’l Trade Balance – Dec -$87.4 Bil -$87.4 Bil -$80.7 Bil

3-10 / 7:30 am Initial Claims – Mar 6 217K 215K 215K

7:30 am CPI – Feb +0.8% +0.7% +0.6%

7:30 am “Core” CPI – Feb +0.5% +0.5% +0.6%

3-11 / 9:00 am U. Mich Consumer Sentiment- Feb 61.3 62.8 62.8

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The State of Ukraine, The Fed, & The Union

Please join Raymond James Chief Investment Officer Larry Adam and other thought leaders for an update on the situation in Ukraine, and a preview of what may come in Fed Chair Powell’s semi-annual testimony to Congress and President Biden’s State of the Union address. Joining him on the webinar will be:

• Frank Kelly, Senior Political Strategist for DWS & Managing Partner of Fulcrum Macro Advisors LLC*

• Tracey Manzi, Senior Investment Strategist

• James Camp, Managing Director, Strategic Income, Eagle Asset Management**

* DWS & Fulcrum Macro Advisors, LLC is not affiliated with Raymond James

** An affiliate of Raymond James & Associates, Inc., and Raymond James Financial Services, Inc.

 Click on the link below to register

https://raymondjames.zoom.us/webinar/register/WN_AwfxToTFQYOV3jGpynjz_w

Matt Goodrich, Financial Advisor

President, Goodrich and Associates, LLC

Branch Manager, Raymond James Financial Services

12 Bellwether Way, Suite 215 // Bellingham, WA 98225 // 360.671.0226
matt.goodrich@raymondjames.com // goodrichassociates.net

© 2022 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. © 2022 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value.

All expressions of opinion reflect the judgment of the author(s) and are subject to change.  Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Economic and market conditions are subject to change. Past performance may not be indicative of future results.

February Market Review

March 1, 2022

Dear Friends and Clients,

Investors have been on a bumpy ride as both domestic and emerging markets have seen continued volatility over the past few months. February was no exception with the broad-market S&P 500 dipping into its first 10% correction in almost two years as geopolitical tensions intensified. The last week of February brought the somber news of escalating conflict in Eastern Europe. I, along with many of you, hope for a peaceful resolution soon without further loss of life.

The world continues to watch this very fluid situation between Russia and Ukraine. While the conflict is troubling, investors need not overreact, advises Raymond James Chief Investment Officer Larry Adam. We’re likely to see the biggest financial impact in the form of increased prices on commodities produced in the region, namely oil, natural gas, wheat, palladium and aluminum.

The situation has added to macro uncertainty and impacted legislative priorities on Capitol Hill, says Ed Mills, Washington Policy Analyst. Generally speaking, defense considerations and supply chain security/domestic manufacturing capability have risen on the congressional to-do list. President Biden’s March 1 State of the Union address will inform the direction of the domestic agenda and potential policy changes. 

Investors are factoring in tighter monetary policy. The Fed is expected to start raising short-term interest rates in March and begin reducing its balance sheet later this year. Compared to the start of previous tightening cycles, the U.S. economic outlook is a lot stronger, the labor market is a lot tighter, and inflation is substantially higher, notes Raymond James Chief Economist Scott Brown.

The crisis will weigh on a market already struggling with high inflation and the coming transition to tighter monetary policy, says Mike Gibbs, managing director of Equity Portfolio & Technical Strategy. Gibbs notes that despite elevated uncertainty, history shows that geopolitical events such as this often create a buying opportunity for long-term investors.

In the United States, a late rally helped the S&P 500 regain some of its earlier losses for the month. Let’s look at the longer-term numbers:

Higher commodity prices would weigh on global consumer spending, including in the U.S. Russia may be tempted to retaliate against aggressive sanctions by limiting energy exports to the European Union (EU), though Russia’s own economy would feel even more pain in this scenario. The crisis has raised the issue of energy security across Europe. It’s a good bet that European policymakers feel an urgency to reduce dependence on Russian oil and gas, which aligns with the EU’s climate agenda to move away from fossil fuels and toward renewable energy and electric vehicles.

Despite the conflict, losses were modest in Europe and the U.K. The region’s fourth quarter 2021 corporate earnings season came in slightly higher than expectations, although inflationary challenges have increased across much more than oil or gas prices. The conflict could also hinder wheat supply, as well as the global supply of palladium, which is needed for fuel cells, solar energy and electric vehicles.

Bottom line

Despite uncertainty, geopolitical conflicts tend to create buying opportunities for long-term equity investors, who may want to strategically add positions in select sectors (e.g., materials, energy and financials). Equity declines associated with previous conflicts typically are followed by higher markets six to 12 months later, analysis shows. We expect to see more market turbulence over the next several months. For now, equity valuations remain attractive and economic fundamentals remain strong in our view. Corrections can be uncomfortable, and I encourage long-term investors to stay patient.

I firmly believe a disciplined financial plan gives you the best chance of making progress toward your future goals. Thank you for your continued trust in me. Please feel free to reach out with any questions.

Sincerely,

Matt Goodrich, Financial Advisor                

President, Goodrich & Associates, LLC       

Branch Manager, RJFS

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small-cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Small-cap securities generally involve greater risks. International investing is subject to additional risks, such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks. These risks may be greater in emerging markets. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

Material prepared by Raymond James for use by its advisors.

Thoughts on Ukraine

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

February 28, 2022

They say the truth is the first casualty of war…so, here we are about one week into the Russian invasion of Ukraine and the fog of war is still very thick.

Over the past few weeks, it has been conventional wisdom that Russia would take parts of Ukraine (maybe all) and then things would settle down while the world awaited further actions. In the worst-case scenario, those moves could include closing the current 40-mile wide border between Poland and Lithuania, which could lead to direct NATO military involvement and a wider conflict.

So far, things haven’t unfolded as many thought they would. Supply-chain issues for the Russian military and formidable opposition are slowing Russia’s advance. In addition, more sanctions and military help from countries around the world have given many hope that hostilities end early with Russia falling well short of its goals.

If Russia is unable to take control of Ukraine or even forced to retreat, Vladimir Putin could be in more than just political trouble. His inner circle may not like risking access to their personal wealth on what they might believe is an ill-advised military adventure. For Putin, this is a huge incentive to continue his attack, and escalate. Nothing is totally clear.

What we are more confident about is what the conflict means for public policy. Policies designed to suppress US energy production are going to be tougher for the voting public to digest. The same is true for many European countries, with Germany now discussing building a natural gas reserve.

How about green energy? Many will keep pushing it, and those projects will continue, but it’s going to be tougher to curtail drilling, extraction, and pipelines for old-fashioned fossil fuels.

Meanwhile, Build Back Better, President Biden’s plan to raise spending and taxes for the next decade, looks even less likely than before. War means disruption and many will argue we should wait and see how the economy reacts to the conflict.

In addition, while the war will likely make global supply chain issues even more problematic and inflationary, the Federal Reserve is likely to pull back on tightening plans because of the potential economic upheaval. A rate hike of 50 basis points in March is unlikely.

Meanwhile, at least one polling average now shows the GOP ahead in the congressional generic ballot by 3.7 points over the Democrats. Comparing this to historical readings suggests the government will be politically divided in 2023. In turn, divided government reduces the odds of future tax hikes and spending increases.

In addition, while not related to Ukraine, we think the Supreme Court’s recent decision slapping down private-sector vaccine mandates by OSHA is a sign that it is willing to limit the power of bureaucrats. This is good news for growth.

Put it all together and we think the prospects for more bills that expand government are waning while the Court seems to be more wary of regulatory expansions, as well.

While war is hell and our prayers are with the Ukrainians, the direction of policy is moving toward the better.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

2-28 / 8:45 am Chicago PMI – Feb 62.3 64.3 56.3 65.2

3-1 / 9:00 am ISM Index – Feb 58.0 58.2 57.6

9:00 am Construction Spending – Dec -0.1% +0.6% +0.2%

afternoon Total Car/Truck Sales – Feb 14.5 Mil 14.2 Mil 15.0 Mil

afternoon Domestic Car/Truck Sales – Feb 11.3 Mil 10.9 Mil 11.7 Mil

3-3 / 7:30 am Initial Claims – Mar 2 225K 226K 232K

7:30 am Q4 Non-Farm Productivity +6.6% +6.9% +6.6%

7:30 am Q4 Unit Labor Costs +0.3% +1.4% +0.3%

7:30 am ISM Non Mfg Index – Feb 61.0 61.1 59.9

9:00 am Factory Orders – Dec +0.5% +1.5% -0.4%

3-4 / 7:30 am Non-Farm Payrolls – Feb 400K 380K 467K

7:30 am Private Payrolls – Feb 408K 350K 444K

7:30 am Manufacturing Payrolls – Feb 22K 23K 13K

7:30 am Unemployment Rate – Feb 3.9% 3.8% 4.0%

7:30 am Average Hourly Earnings – Feb +0.5% +0.4% +0.7%

7:30 am Average Weekly Hours – Feb 34.6 34.6 34.5

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Initial Thoughts on Ukraine and the Markets

First Trust Economic Video Commentary

Brian S. Wesbury - Chief Econmist

February 24, 2022

Anything can happen in war, and our hearts go out to the people impacted by Russia's actions.

But we have to analyze what impact these events will have on the US economy and markets.

Click here for Brian Wesbury's initial thoughts

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James. All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Russia and Ukraine – On The Edge

Raymond James Client Webinar

Larry Adam - Chief Investment Officer

February 24, 2022

Staying informed about current economic and financial market developments is key to successful financial planning. That’s why I’m sharing with you this webinar featuring Raymond James Chief Investment Officer Larry Adam, which was recorded on Thursday, February 24. It contains some great insights into the financial markets. I hope you find it as informative as I did.

Please feel free to get in touch if you’d like additional perspective or guidance. I’m always available to discuss any concerns or questions you may have about your portfolio or to explore how you may benefit from personalized financial planning.

Click on the link below to watch the webinar.

https://www.raymondjames.com/investment-strategy-client-call

Sticking to Our Targets, For Now

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

February 22, 2022

Late last year we unveiled our stock market forecast for 2022, projecting the S&P 500 would rise to 5,250 and the Dow Jones Industrials average would climb to 40,000. Since then, however, equities have dropped, with (now realized) fears about Russia invading Ukraine and the recognition that inflation is a more persistent problem than the Federal Reserve had previously let on, which means some combination of faster rate hikes or a higher ultimate peak for short-term interest rates, or both.

Reaching our year-end equity targets would now take a steeper climb than we previously thought: 20.7% for the S&P 500 and 17.4% for the DJIA, from Friday’s close. But we still like those targets and don’t see enough reason to change them.

As we wrote last week, Russia would likely invade Ukraine by soon after the Olympics ended, but that such an invasion is unlikely to change the long-term outlook for corporate profits. As a result, any drop in equities would end up being a buying opportunity.

Sure, the Biden Administration might try to exert pressure on Russia through economic and financial sanctions. But other countries, like China and Germany, have strong interests in continuing to exchange freely with Russia. Ultimately, right or wrong, we think the Biden Administration is more concerned about managing its image involving the Russia-Ukraine conflict, for purposes of domestic politics (like, not “appearing weak”), than trying to alter the outcome of the conflict itself.

Meanwhile, and for the time being, inflation is likely to be equities’ friend, not their foe. Companies with pricing power, commodities’ companies, and materials’ firms, in particular, should do well.

In addition, the message from our Capitalized Profits Model hasn’t changed, at least not yet. The cap profits model takes the government’s measure of profits from the GDP reports, discounted by the 10-year US Treasury note yield, to calculate fair value. Corporate profits for the third quarter were up 19.7% versus a year ago, up 21.2% versus the pre-COVID peak at the end of 2019, and at a record high.

The key question then becomes what discount rate should we use? If we use 1.90%, roughly the current 10- year Treasury yield, our model suggests the S&P 500 is still grossly undervalued. But, with the Fed about to embark on a series of rate hikes and inflation likely to keep running relatively hot, the 10-year yield is likely to keep rising, although with fits and starts.

So, to be cautious, we plug in some alternative higher long-term interest rates. Using third quarter profits, it would take a 10-year yield of about 3.00% for our model to show that the stock market is currently trading at fair value. And that assumes no further growth in profits. With a 10- year yield of 2.50% all it would take is profits 3% above the level in Q3 for our model to estimate fair value at 5,250, which is what we projected for the end of 2022.

The bottom line is that the winds of change are blowing hard in 2022: COVID is winding down, borders are in flux, and monetary policy is in for a major and long overdue shift. In spite of these changes, we think equities are likely to rebound from recent strife and work their way higher this year. The bull market in stocks won’t last forever. But, for now, it isn’t at an end.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

2-24 / 7:30 am Initial Claims – Feb 20 235K 237K 248K

7:30 am Q4 GDP Second Report 7.0% 7.1% 6.9%

7:30 am Q4 GDP Chain Price Index 6.9% 6.9% 6.9%

9:00 am New Home Sales – Jan 0.803 Mil 0.849 Mil 0.811 Mil

2-25 / 7:30 am Durable Goods – Dec +1.0% +2.3% -0.7%

7:30 am Durable Goods (Ex-Trans) – Dec +0.4% +0.2% +0.6%

7:30 am Personal Income – Jan -0.3% -1.0% +0.3%

7:30 am Personal Spending – Jan +1.6% +1.6% -0.6%

9:00 am U. Mich Consumer Sentiment- Feb 61.7 61.7 61.7

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Russia and Rate Hikes

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

February 14, 2022

The financial markets have been on tenterhooks lately for two main reasons: Russia and rate hikes.

By the time you read this, Russian tanks may already be rolling across the Ukrainian border. If not, we think an invasion of eastern Ukraine will probably start soon after the Olympics, to avoid embarrassing China, which is a Russian ally (for now). Not invading at all after a big build-up of troops, arms, and equipment, would make it tough for Russia to bluff in the future. By contrast, re-incorporating more of Ukraine into Russia would seal for Vladimir Putin an esteemed place in Russian history.

An invasion would likely set off a flight to lower-risk assets, but we don’t think it changes the outlook for corporate profits over time, and so any downdraft in equities would be temporary and a buying opportunity.

Meanwhile, financial markets are also agonizing about how far and how fast the Fed will have to go to fight inflation. At the end of 2021, the futures market in federal funds was pricing in 75 basis points of rate hikes this year. Now the market is pricing in 150 - 175 bps.

Those hikes aren’t just warranted, they’re needed. Consumer prices are up 7.5% from a year ago, the fastest gain since the early 1980s. “Core” prices, which exclude food and energy, are up 6.0% from a year ago. And with the M2 measure of money up more than 40% since the start of COVID, there is plenty of inflation in the pipeline.

Given these data and the willingness of relatively dovish policymakers to consider rate hikes, we now think the Fed will raise rates 125 basis points this year. The most likely path would be a series of 25 bp rate hikes at the next four meetings, in March, May, June, and July, followed by a pause during election season, then one more hike in December. That makes five total in 2022.

Some analysts and investors think the Fed will go 50 in March. We’d love that! The Fed is way behind the inflation curve and needs to catch up. But we don’t yet think 50 will happen. Why? Because if the Fed is willing to go 50, it wouldn’t still be expanding the balance sheet. What would change our minds: if the Fed announces a sudden and early end to QE, then 50 becomes our base case for March.

The other open question is how forcefully the Fed will pursue Quantitative Tightening. The fastest pace of QT in the prior cycle was $50 billion per month. We think the Fed starts QT around mid-year, gets to a $50 billion monthly pace by year end, and eventually gets to a $75 - 100 billion pace range in 2023.

The key to remember, though, is that there’s a huge difference between the Fed becoming “less loose” versus “tight.” A tight Fed is still a long way off. For the moment, long-term investors think the Fed can wrestle inflation back under control with relative ease. The Fed calculates what the Treasury market expects inflation to average in the five-year period starting five years from now. It’s called “five-year forward inflation.” And that inflation forecast is still below 2.5%.

As a result, for 2022, we do not think higher short-term rates will immediately generate an equal reaction in longer-term yields. Longer-term yields should move up and will be a headwind for equities, but equities should also move higher as profit growth (for the time being) more than fully offsets that problem. The key issue is when investors realize the Fed can’t wrestle inflation down quickly and must push rates even higher. We think that’s 2023 and beyond.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

2-15 / 7:30 am PPI – Jan +0.5% +0.6% +0.2%

7:30 am “Core” PPI – Jan +0.4% +0.3% +0.5%

7:30 am Empire State Mfg Survey – Feb 12.0 20.0 -0.7

2-16 / 7:30 am Retail Sales – Dec +2.0% +2.5% -1.9%

7:30 am Retail Sales Ex-Auto – Dec +1.0% +1.1% -2.3%

7:30 am Import Prices – Jan +1.2% +0.6% -0.2%

7:30 am Export Prices – Jan +1.1% +1.0% -1.8%

8:15 am Industrial Production – Jan +0.5% +0.6% -0.1%

8:15 am Capacity Utilization – Jan 76.8% 76.9% 76.5%

9:00 am Business Inventories – Nov +2.1% +2.1% +1.4%

2-17 / 7:30 am Initial Claims – Feb 12 218K 225K 223K

7:30 am Housing Starts – Jan 1.696 Mil 1.690 Mil 1.702 Mil

7:30 am Philly Fed Survey – Feb 20.0 25.3 23.2

2-18 / 9:00 am Existing Home Sales – Jan 6.100 Mil 6.210 Mil 6.180 Mil

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Not All That

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

February 7, 2022

Nothing is normal about the current business cycle; it really is unique. It started with a massive COVID-related lockdown, which caused the deepest and fastest recession on record. Then we had a recovery based on re-opening plus an unprecedented peacetime expansion in government spending. But rarely have we seen an economic report as misinterpreted as Friday’s jobs report.

The key headline that investors and analysts rejoiced about was the 467,000 increase in nonfarm payrolls, not only well above the consensus expected 125,000 but also well above the highest forecast from any economic group. And if that were the only piece of information in the entire report, it would make sense to celebrate.

But there are plenty of other key pieces of data in every jobs report. One of them is the number of hours worked and that part of the report was not strong at all. Average weekly hours per worker declined to 34.5 in January from 34.7 in December. As a result, the total number of hours worked fell 0.3%, the largest decline in almost a year.

If that 0.3% drop had come in the form of fewer jobs while the number of hours per worker didn’t change at all, private payrolls would have declined about 350,000 in January. Obviously, in that scenario, many of the investors and analysts who cheered Friday’s report would have been jeering, instead. And, yet, both situations have the same exact demand for total hours from workers by businesses across the US.

But what about the huge 709,000 upward revisions in payrolls in November and December? Usually we’re big fans of including revisions for prior months when assessing a payroll report. However, the January report every year is different. It’s the one time a year when those revisions should be ignored. Why? Because it’s the month when the Labor Department goes back and revises monthly seasonal adjustment factors for the whole calendar year. This year, November and December figures were revised up substantially, but all those gains came out of June and July, which were revised down.

But how about those stellar numbers from the other part of the employment report? Civilian employment, an alternative measure of jobs that includes small-business start-ups, rose almost 1.2 million in January, appearing to confirm the strength of the headline growth in payrolls. Meanwhile, it looked like the labor force (the number of people working or looking for work) grew almost 1.4 million.

However, once again, a statistical quirk was at work. Every January, the Labor Department inserts into the jobs report new Census Bureau estimates on the total size of the US population, which, in turn, affects the numbers on the labor force and employment. That population adjustment was responsible for all the increase in civilian employment and the labor force in January; without that quirk, Labor would have reported a 272,000 drop in civilian employment and a 137,000 decline in the labor force.

But what about the increase in wages? Average hourly earnings grew 0.7% in January. That’s certainly a rapid pace and very likely outpaced inflation in January. But these wages are up only 5.7% in the past year, which is almost certainly slower than inflation over the same twelve months and which is no reason to celebrate. We are not asserting the January jobs report was “bad” news, that the US is teetering on the edge of a recession, or that the Federal Reserve should call off its intention to raise short-term rates, stop Quantitative Easing, or start Quantitative Tightening.

Far from it. We expect continued job growth in the months ahead and a rebound in hours worked. The Fed was behind the inflation curve before Friday’s report and still is today. We still expect rate hikes starting in March – we think 25 basis points, although the futures market is pricing in a significant shot of 50 – as well as an end to QE in March and a start to QT around midyear.

But we’ve never been shy about bucking the conventional wisdom when we think it’s wrong and we’re not about to start: Friday’s jobs report was mediocre, not the very positive news most investors and analysts thought it was. We expect that the year or two ahead will have multiple occasions like this; both when we think the data are worse than others think, as well as when we think it’s better. We will tell you every time.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

2-7 / 2:00 pm Consumer Credit– Dec $21.9 Bil $21.8 Bil $40.0 Bil

2-8 / 7:30 am Int’l Trade Balance – Dec -$83.0 Bil -$83.4 Bil -$80.2 Bil

2-10 / 7:30 am Initial Claims – Feb 5 230K 235K 238K

7:30 am CPI – Jan +0.4% +0.5% +0.5%

7:30 am “Core” CPI – Jan +0.5% +0.5% +0.6%

2-11 / 9:00 am U. Mich Consumer Sentiment- Feb 67.3 69.0 67.2

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

January Market Review

February 1, 2022

Dear Friends and Clients,

Volatility was the trend for domestic and foreign equity markets in January, as well as the domestic bond market, albeit to a lesser extent. The broad-market S&P 500 flirted with a 10% pullback, for example. The ups and downs in the domestic equity indices stabilized briefly ahead of the Federal Reserve’s (Fed’s) meeting, which left short-term interest rates unchanged, but turned skittish shortly after Fed Chair Jerome Powell announced there was “quite a bit of room” to raise rates in the near future. The market seemed to have priced in three hikes this year but may have presumed the announcement meant the central bankers planned two more moves in response to inflationary pressures, explains Raymond James Chief Investment Officer Larry Adam.

Powell said that no decisions have been made as yet, but he could not rule out raising rates more aggressively if warranted. Chief Economist Scott Brown believes accelerated increases are not necessarily a foregone conclusion but notes that the labor market is tight, and inflation is well above the Fed’s long-term goal of 2%.

With uncertainty regarding inflation, economic slowing (though it remains at a healthy growth rate) and a Fed tightening cycle upon us, we may be in for several months of volatility before the market can resume its uptrend, notes Joey Madere, senior portfolio strategist, Equity Portfolio & Technical Strategy. Headwinds also include geopolitical tensions between Russia and Ukraine as well as uncertainty over the direction of U.S. policy. In Washington, D.C., the current focus appears to be on economic competition and China policy, which has the potential to boost next-generation technology and domestic manufacturing, adds Washington Policy Analyst Ed Mills.  

Let’s look at the longer-term numbers:

As we close out the month, here are a few trends we’re keeping an eye on:

Sector roundup

We are also seeing slow progress toward a revised and targeted Build Back Better bill, which could direct additional federal funding toward energy and renewables, healthcare, and education, but the potential timeline for a final deal remains unclear.

Technology companies have borne the brunt of market weakness this year as higher interest rates put pressure on high valuations. While valuations remain relatively expensive, importantly, information technology demand remains strong and supportive of the sector’s backdrop. 

Tension on the Russia-Ukraine border drove up natural gas prices in the European market as Russia deliberately curtailed its export volume. We believe that Russia’s aggressive strategy is partly economic and partly political. In the meantime, the U.S. and other exporters are bolstering supply. Concern about excessive dependence on Russian oil and gas will likely accelerate energy transition toward wind, solar and energy efficiency, notes Energy Analyst Pavel Molchanov.

Around the world

Almost all equity markets across Europe, Asia and the world’s other emerging economies saw losses in January. However, performance was best in the U.K. and select emerging markets in Latin America due to a range of strong commodity sector performances. A little over half of early corporate earnings season updates in Europe and Asia have been ahead of expectations, but both February and March will provide more detailed insights.

Unsurprisingly, the latest International Monetary Fund survey showed a reduction in 2022 economic growth expectations. While a number of emerging market central banks raised interest rates during January, the People’s Bank of China continued to soften monetary policy in an attempt to counter slowing Chinese growth levels. The European Central Bank will not change its formal negative interest rate policy for at least a few quarters, but the Bank of England is set to further raise its interest rates in February.

The bottom line

As we approach the two-year anniversary of this bull market where, historically, returns become more moderate, volatility increases and investors become more discerning (e.g., selectivity becomes critical), it is important that market participants remain patient, committed to their investment strategy and avoid any knee-jerk portfolio moves.

We have said in recent months that volatility and pullbacks are to be expected throughout 2022, although overall conditions are likely to remain healthy. And wider spreads coupled with higher Treasury yields translates to higher income opportunities for fixed income investors. Savvy investors may elect to thoughtfully add to their portfolios at opportune times. I’m here to provide you not only with insight, but with advice on how we can work to help manage the effects of – and capitalize upon – the markets’ movements.

I know that volatility can be unnerving but sticking to a financial plan has historically worked in favor of long-term investors, which is why I remain focused on helping you make progress toward your future goals. Thank you for your continued trust in me. Please feel free to reach out with any questions.

Sincerely,

Matt Goodrich, Financial Advisor                

President, Goodrich & Associates, LLC       

Branch Manager, RJFS

Investing involves risk and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small-cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Small-cap securities generally involve greater risks. International investing is subject to additional risks, such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks. These risks may be greater in emerging markets. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.

 Material prepared by Raymond James for use by its advisors.

Rate Hikes Finally on the Way

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

January 31, 2022

The Federal Reserve’s policy statement from last week plus Jerome Powell’s post-meeting press conference made it abundantly clear it is ready to start raising short-term interest rates in March.

As of early this morning, the futures market for federal funds was pricing in five rate hikes (of 25 basis points each) in 2022. We think that many rate hikes are warranted; we’d even support more. The Fed is badly behind the inflation-fighting curve. The Consumer Prices Index rose 7.0% in 2021, the largest increase for any calendar year since 1981. Meanwhile, commodity prices continue to rise.

However, we’re still skeptical the Fed will move as aggressively as the financial markets are pricing in. If the Fed were really serious about the inflation fight, why didn’t it announce a sudden and early end to Quantitative Easing last week? Instead, the Fed maintained QE, which increases the size of its balance sheet, even as it released a set of “principles” for reducing the size of the balance sheet.

Think about how absurd the current situation is. Maintaining QE while signaling it will soon start Quantitative Tightening is like deciding to keep digging a hole deeper, even though you already know that in an hour you’re going to take all the dirt you dug up and use it to fill the same hole back in. Why not just stop digging now!

Either way, we think QT starts around mid-year and the Fed will be more aggressive about it than it was back in 2017-19, when the fastest pace of QT was about $50 billion per month. The best reason to implement a larger QT is that the Fed needs to counteract the excessive growth in the M2 measure of the money supply that is the root cause of higher inflation. Unfortunately, the Fed is still not focused on reducing M2 as a policy goal.

Instead, we think the Fed will pursue a robust pace of QT for other reasons. First, the Fed would use QT as a signal of its commitment to keep lifting rates, knowing that market conditions may, from time to time, make it temporarily tougher for the Fed to hike. Second, the Fed thinks selling off longer maturity securities could modestly lift long-term interest rates, creating more room for it to raise short-term rates without inverting the yield curve.

And third, if the Fed doesn’t substantially reduce the balance sheet, it could be a position in a few years where it’s paying large financial institutions around $100 billion per year. That’s what would happen if the banks are still holding $4 trillion in Fed reserves while short-term rates have hit 2.5%. No Fed chief wants to explain to Congress why it’s paying the biggest US banks $100 billion per year.

The bottom line is that the Fed has its work cut out for it. This won’t be a one-year job, or even two. Wrestling inflation back under control may take several years. The sooner the Fed focuses its attention on M2 and renews its respect for Milton Friedman the easier that job will be.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

1-31 / 9:00 am Chicago PMI – Jan 61.8 61.8 65.2 64.3

2-1 / 9:00 am ISM Index – Jan 57.5 58.0 58.8

9:00 am Construction Spending – Dec +0.6% +0.3% +0.4%

afternoon Total Car/Truck Sales – Jan 12.9 Mil 14.7 Mil 12.4 Mil

afternoon Domestic Car/Truck Sales – Jan 10.4 Mil 11.5 Mil 9.9 Mil

2-3 / 7:30 am Initial Claims – Jan 30 245K 250K 260K

7:30 am Q4 Non-Farm Productivity +3.3% +5.1% -5.2%

7:30 am Q4 Unit Labor Costs +1.0% +0.9% +9.6%

9:00 am ISM Non Mfg Index – Jan 59.5 60.1 62.3

9:00 am Factory Orders – Nov -0.4% -1.0% +1.6%

2-4 / 7:30 am Non-Farm Payrolls - Jan 150K 175K 199K

7:30 am Private Payrolls – Jan 113K 185K 211K

7:30 am Manufacturing Payrolls – Jan 23K 25K 3.9%

7:30 am Unemployment Rate – Jan 3.9% 3.8% +0.8%

7:30 am Average Hourly Earnings – Jan +0.5% +0.4% +0.6%

7:30 am Average Weekly Hours - Jan 34.7 34.7 34.7

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The 2021 Finish: Fast Growth, High Inflation

First Trust Monday Morning Outlook

Brian S. Wesbury - Chief Economist

January 24, 2022

When fourth quarter GDP data is released later this week, it will show that 2021 finished on a high note. Unfortunately, the high note included not only strong economic growth but also rapid inflation. This shouldn’t be a surprise; it’s what you get when you mix a huge surge in government spending with very loose monetary policy.

At present, we estimate that real GDP grew at a 5.7% annual rate in the fourth quarter. If we’re right, then real GDP grew 5.2% in 2021 (Q4/Q4), the fastest pace for any calendar year since the Reagan Boom in 1984. However, that rapid growth follows a 2.3% contraction in 2020. As a result, real GDP at the end of last year was up only 1.4% annualized versus the end of 2019 (the last quarter before COVID). That’s slower than the pre-COVID trend in economic growth, which means that in spite of the fastest growth in decades last year, the economy remains smaller than it would have been if COVID and all the related lockdowns hadn’t happened. Glass half-full, glass half empty.

The same can’t be said about inflation, which is clearly higher than the pre-COVID trend. We estimate that GDP prices rose at a 5.9% annual rate in the fourth quarter, which would bring the 2021 (Q4/Q4) increase to 5.6%, the highest inflation for any calendar year since 1981. That follows a moderate 1.5% gain in 2020.

Bear in mind that we get a report on Wednesday that will tell us about inventories and international trade in December, and those figures may change our projections a little. But, as of now, here’s how we get to our 5.7% real GDP growth forecast for the fourth quarter.

Consumption: Car and light truck sales fell at a 15.5% annual rate in Q4, largely due to continued supply-chain issues. However, “real” (inflation-adjusted) retail sales outside the auto sector rose at a 1.0% rate and it looks like real services spending should be up at a solid pace. Putting it all together, we estimate real consumer spending on goods and services, combined, increased at a moderate 2.0% annual rate, adding 1.4 points to the real GDP growth rate (2.0 times the consumption share of GDP, which is 69%, equals 1.4).

Business Investment: The fourth quarter should show slight growth in both business investment in equipment as well as commercial construction, while investment in intellectual property rose at a typically strong rate. Combined, business investment looks like it grew at a 5.3% annual rate, which would add 0.7 points to real GDP growth. (5.3 times the 13% business investment share of GDP equals 0.7).

Home Building: Residential construction looks like it slowed slightly in the fourth quarter. That’s not due to less demand – sales are trending higher and inventories remain very low – but instead reflects supply-chain issues and lingering problems finding willing workers. We estimate a contraction at a 4.3% annual rate in Q4, which would cut 0.2 points from real GDP growth. (-4.3 times the 5% residential construction share of GDP equals -0.2).

Government: Remember, only direct government purchases of goods and services (and not transfer payments like unemployment insurance) count when calculating GDP. We estimate federal purchases grew at a 1.1% annual rate in Q4, which would add 0.2 points to real GDP growth. (1.1 times the 18% government purchase share of GDP equals 0.2).

Trade: Imports and exports have both recovered but imports have recovered faster, which should result in a slightly larger trade deficit in Q4. At present, we’re projecting that the increase in imports relative to exports will subtract 0.1 points from real GDP growth in Q4.

Inventories: Inventories look like they finally started surging in Q4. Inventories are still very low, but they’re moving in the right direction. We estimate that the surge will add 3.7 points to real GDP growth.

Add it all up, and we get a 5.7% annualized real GDP growth for the fourth quarter. Look for continued growth in 2022, but not nearly as fast, as the artificial “sugar high” from excessive government spending runs its course.

Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous

1-26 / 9:00 am New Home Sales – Dec 0.760 Mil 0.778 Mil 0.744 Mil

1-27 / 7:30 am Initial Claims – Jan 25 265K 230K 286K

7:30 am Q4 GDP Advance Report 5.3% 5.7% 2.3%

7:30 am Q4 GDP Chain Price Index 6.0% 5.9% 6.0%

7:30 am Durable Goods – Dec -0.6% -0.7% +2.6%

7:30 am Durable Goods (Ex-Trans) – Dec +0.4% +0.3% +0.9%

1-28 / 7:30 am Personal Income – Dec +0.5% +0.8% +0.4%

7:30 am Personal Spending – Dec -0.6% -0.4% +0.6%

9:00 am U. Mich Consumer Sentiment- Jan 68.8 69.5 68.8

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James.  All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.