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October 21, 2023 Market Update

The selling returned to the stock market last week after a brief two-week hiatus.  The S&P 500 Index tumbled 2.4%, falling to its lowest level since June.  On the short list of factors weighing on investor sentiment: the ongoing Israel-Palestinian conflict and rising interest rates in the bond market.

The yield on the U.S. 10-year Treasury Note briefly rose above 5.0% on Thursday before pulling back to 4.93% on Friday.  But that still leaves the benchmark rate close to its highest level since 2007, which presents an increasingly competitive alternative to equities.

As many of you know, The Milwaukee Company has been selected to serve as the investment manager of The Brinsmere Funds, which are two new exchange traded funds (ETFs) that were set to commence trading on the New York Stock Exchange on October 24th.  For the reasons discussed below, we have decided to postpone the launch of those funds until the economic and geopolitical environments become less murky.

The near-term outlook for the stock and bond markets did not get any clearer in the past week.  As I mentioned in last week’s post, the war between Hamas and Israel is the most disconcerting development, from human and market perspectives.  Unfortunately, the risk appears to be rising that the U.S. and other nations may be drawn into a wider regional conflict.

Financially, we learned last week that retail sales grew sharply in September and the job market remains hot, suggesting the economy is still expanding at a healthy pace and perhaps not decelerating as much as the Federal Reserve would like to help slow the rate of inflation. 

Housing starts also rose in September, but applications for building permits are down about 7.2% compared to last year.  In addition, the yield curve remains inverted, and experts are divided on whether a recession may have been delayed rather than avoided entirely.

On the political front, the House of Representatives still hasn’t selected a leader, which raises the risk of a government shutdown on November 17th, and hampers America’s ability to provide military aid to Ukraine and Israel.

All this uncertainty makes it a bad time to launch new ETFs, in my opinion.  Hopefully, things will become clearer in the next few weeks.  If you are interested in learning more about the ETFs we will be managing, give me a call -- I’ll be happy to tell you about them.

That’s all for now.  Have a great weekend and invest wisely my friends.