Chad Taylor:

Good morning. My name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas and I also again have Candace McCormack, financial advisor, here as well on with us today. We wanted to go over just a few pieces of information that we have been watching this week.

Today is, what's today? The 10th of November, so Thursday the 10th of November. It's been a kind of wild week, Candace, with the election and then today with the inflation number that came out. We had some cryptocurrency stuff going on so it's been a wild week.

We started off the week with the election, but I guess at this point we still don't know who's won everything. It looks like the Senate's going to go to a runoff. It sounds like the Republicans are going to take the House, giving us a split government that we haven't had in the last few years. That always brings up different things that's going on with the economy.

But hopefully by the time we get this through compliance, we'll know who's won everything so by the time you see this, it might have already been announced. But it led to some kind of market volatility so far this week. It was good earlier in the week. It was good on election day. Then yesterday, the market sold off pretty heavily. Some because we didn't get a conclusion to who won. Some because of, as I mentioned, the FTX Brokerage Cryptocurrency Exchange is having issues, which kind of bled over into the general market.

And then some for the inflation number that came out today, anticipating if it was going to be higher than normal, and actually it was high but it came down and it was a little bit less than what was anticipated. It came in year over year at 7.7% down from the September number of 8.2%. So finally a little less bad news, I guess, on the inflation front.

So far this year, the S&P 500 as of last night was down about 21%. The NASDAQ was down about 33% so far this year. Bonds are still down, like Candace and I talked about in the last video, although they're rallying today as well. So when the inflation number came in a little bit lower than what was anticipated the stock market is up today. So far, we'll see. It's a long... It's 10 o'clock so we've got some time before the end of the day and the bond market is up.

And so it's been an eventful week, but Wells Fargo advisor in Investment Institute still is saying that we probably will see a recession later this year, early next year, middle of next year, depending on how bad it is and Candace and I saw a chart that we wanted to go over, and it talks about what the markets do when we do get into that recession if it in fact does happen.

So I'll share my screen. All right, Candace.

Candace McCormack:

All right. So thank you Chad for going over all of the current issues and current things that you're seeing on the news. But it is important to remember that stocks are always forward looking and so what this chart is showing you is the S&P 500 index performance and the calendar days around when a recession ends.

So it's a pretty simple picture to explain that stocks typically bottom out four months before the end of a recession. So you've heard people probably say stocks are forward thinking, I've heard four months, six months, nine months, whatever it is. It changes obviously, but the average is about four months before the end of a recession. So that's important to keep in mind. But what does that really mean?

So in the stock market, valuations are reflective of expected future earnings, expected activities, expected changes. So they're really a leading indicator for the market in general. The market is always pricing in new information and expectations about the future. So earlier this year has been rough and the market was likely already pricing in changes with the Federal Reserve and interest rates going up.

GDP, just it's pricing in what's going to happen down the road. So again, in the first few months of the year, it was really rough, probably pricing in the Fed rate hikes. So important to keep in mind so we don't make snap decisions when we're investing. It's easy to be swayed by the bombardment of the news and the daily reports of what's going on and an impending recession, that's scary.

But just remember that a lot of this is already priced into the market months ago. Okay, So forward looking. A daily data point that you hear on the news, inflation numbers, things like that. It's easy to get consumed by that but just try to remember that's what it is. It's a daily data point and it's likely been expected and priced into the market already.

So we say stay the course, we make changes when we need to, but the daily news that you're hearing has likely already been priced into the market. While it can be scary, we do know that that markets are forward thinking.

Chad Taylor:

Great. Okay, so we appreciate you spending a few minutes with us. If you have any questions, don't hesitate to reach out. We would always look forward to talking with you. I hope you have a great day.