When markets fall, it’s easy to forget that downtrends are part of the investing cycle. So when prices slip, it’s a good time to review some common terms that you may be hearing that describe today’s financial markets.

The first is “pullback,” the mildest form of a drop in the markets. You might hear a market commentator refer to a dip of 5% to 10% after a peak as a pullback.

The next term is “correction,” which is used when markets drop 10% to 20% after a peak. Then there is a “bear market,” where the drop is 20% or more since the last peak.

When prices are trending lower, it’s easy to second-guess yourself. But over the years, I’ve found that doesn’t help.

We’ve aligned your investment strategy with your goals, time horizon, and risk tolerance. We built your portfolio anticipating that there will be good times and bad.

If you find yourself thinking “this time, it’s different,” please reach out as soon as possible. It’s important that you feel comfortable with our approach and we’d be happy to talk with you.

^{The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}
 The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Mixed Results As Interest Rate Concerns Grow

Presented by Elsass Financial Group

Growing concerns about further interest rate hikes, prompted by fresh economic data, reversed early-week gains and left stocks mixed for the week.

The Dow Jones Industrial Average slipped 0.13%, while the Standard & Poor’s 500 fell 0.28%. The Nasdaq Composite index advanced 0.59% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.52%.^1,2,3

Rate Concerns Weigh On Stocks

Stocks opened last week higher on investor hopes that a continued cooling in inflation might support a more dovish Fed. A higher-than-expected rise in the Consumer Price Index (CPI) and strong retail sales in January initially did little to dent that enthusiasm, as stocks posted solid gains through Wednesday’s close.

But that optimism faded on Thursday as a surprising rise in producer prices and another decline in initial jobless claims triggered worries the Fed would stay the course for longer. Comments from two Fed officials supporting a more aggressive rate hike stance added to the unease, erasing much of the week’s gains. Stocks ended mixed on Friday, capping a choppy week.

Inflation Moderation Pauses

Consumer prices climbed 0.5% in January, fueled by rising shelter costs and energy prices. The increase in the CPI was higher than the 0.1% rise in December and slightly above the consensus estimates of 0.4%. The year-over-year inflation number (6.4%) came in lower than December’s 12-month rise of 6.5%, making it the seventh consecutive month of declining year-over-year inflation.⁴

January’s product price report showed a surprise 0.7% increase, higher than the 0.4% rise expected by economists and the biggest jump since June. Year-over year, producer prices rose 6.0%, a slight improvement from December’s number.⁵

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index (PMI) Flash. Existing Home Sales. 

Wednesday: FOMC Minutes.

Thursday: Jobless Claims. Gross Domestic Product (GDP). 

Friday: New Home Sales. Consumer Sentiment.  

^{Source: Econoday, February 17, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Walmart, Inc. (WMT), The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW).

Wednesday: eBay, Inc. (EBAY), The TJX Companies, Inc. (TJX), Nvidia Corporation (NVDA), Diamondback Energy, Inc. (FANG).

Thursday: Block, Inc. (SQ), Pioneer Natural Resources Company (PXD).

Friday: EOG Resources, Inc. (EOG).

^{Source: Zacks, February 17, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“Women, we naturally want to be the best…And I can’t be mad at the next girl for wanting to be the best! Why would I get mad at you for saying you the baddest? Why can’t we both agree that we bad, and that just be that?”

– Megan Thee Stallion (Megan Jovon Ruth Pete)

How Qualified Charitable Distributions Can Help Reduce Your Tax Burden

Generally, distributions from a traditional Individual Retirement Account are taxable in the year the account owner receives them. But, a qualified charitable distribution (QCD) is one exception to this rule. 

A QCD is a nontaxable distribution made directly by the trustee of an IRA to organizations that are eligible to receive tax-deductible contributions. Of course, the main benefit of giving to a charitable organization is making a difference. Yet some tax benefits reward the philanthropic. Making a QCD can help you reduce your taxable income while supporting qualifying charitable organizations. 

*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁶

What Are Polyphenols?

If you’ve researched whole foods much, you’ve likely come across the term “polyphenols.” But what are polyphenols, and why are they important?  

Polyphenols are a category of plant compounds that act as antioxidants, which can neutralize harmful free radicals. Because of this, polyphenols may offer various health benefits, from boosting brain health and digestion to protecting against heart disease, type 2 diabetes, and even some cancers.

There are many sources of polyphenols, such as:

• Dark chocolate
  
• Tea
  
• Dark berries
  
• Apples
  
• Onions
  
• Red cabbage
  
• Whole grains
  
• Chili peppers
  
• Oats
  
• Turmeric
  
• Flax seeds
  
• Sesame seeds

There are several categories of polyphenols, including flavonoids, phenolic acids, and polyphenolic amides.

Tip adapted from WebMD⁷

Four grown men decided to play on the sidewalk for three hours. No one chided them for childish or immature behavior; many appreciated the noise they made. They even went home a bit richer. What were these men doing?

Last week’s riddle: They have no bodies, but you could say they have tails and heads. What are they? Answer: Coins.

 Breaching Humpback whales, Monterey, California 

Footnotes And Sources

^{1. The Wall Street Journal, February 17, 2023}

^{2. The Wall Street Journal, February 17, 2023}

^{3. The Wall Street Journal, February 17, 2023}

^{4. The Wall Street Journal, February 14, 2023}

^{5. CNBC, February 16, 2023}

^{6. IRS.gov, 2023}

^{7. WebMD.com, November 23, 2022}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

^{Copyright 2023 FMG Suite.}

When do you need a will? The answer is easy: Right Now. 

Powell: Inflation Heading In The Right Direction

Presented by Elsass Financial Group

Stocks were mixed last week following better-than-expected corporate reports and increasing optimism over a slowdown in interest rates.

The Dow Jones Industrial Average edged lower, slipping -0.15%. The Standard & Poor’s 500 rose 1.62% while the Nasdaq Composite index led, picking up 3.31%. The MSCI EAFE index, which tracks developed overseas stock markets, increased by 1.16%.^1,2,3

Rally Continues

Strong earnings reports and encouraging inflation data lifted stocks ahead of the Federal Open Market Committee’s (FOMC) decision on Wednesday to hike interest rates by 25 basis points. Markets rallied following the announcement, relieved that the increase was in line with expectations and buoyed by post-meeting comments in which Fed Chair Jerome Powell acknowledged the disinflationary forces in place.

Fresh earnings reports fueled further gains, with positive earnings surprises from several big-name technology companies that benefited the larger universe of Nasdaq-listed high-growth companies. Disappointing earnings from three mega-cap tech companies and a strong employment report triggered a Friday pull-back, paring the week’s gains.

Another Rate Hike

The Federal Reserve raised interest rates by 0.25%, signaling to the financial markets that it would likely hike rates by another 25 basis points at its next meeting in late March. Fed officials said the slowdown in rate hikes might provide time to assess the impact of the accumulated rate hikes. The Fed retained language in its post-meeting statement that future rate hike plans were unchanged to discourage investors’ hopes of an imminent pause in the rate-hike cycle.⁴

In his post-meeting press conference, Fed Chair Powell reiterated the Fed’s commitment not to declare victory on inflation prematurely but acknowledged that a disinflationary trend was underway.⁵

This Week: Key Economic Data

Thursday: Jobless Claims.

Friday: Consumer Sentiment.

^{Source: Econoday, February 3, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Fortinet, Inc. (FTNT), Chipotle Mexican Grill, Inc. (CMG).

Wednesday: CVS Health Corporation (CVS), Prudential Financial, Inc. (PRU), The Walt Disney Company (DIS).

Thursday: AbbVie, Inc. (ABBV), PayPal Holdings, Inc. (PYPL), PepsiCo, Inc. (PEP), Kellogg Company (K), Expedia Group, Inc. (EXPE), O’Reilly Automotive, Inc. (ORLY).  

^{Source: Zacks, February 3, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“A man’s legacy is defined by time.”

– John Cena

Don’t Miss Out On The 2021 Child Tax Credit

Did you know that not just biological parents are eligible for the 2021 child tax credit? Grandparents, foster parents, or people caring for siblings or other relatives should also check their eligibility. If you claim at least one child as your dependent, you may be eligible to benefit from the child tax credit.

In 2021, the IRS expanded the child tax credit. This expansion increased the amount of money families can receive per child and expanded who can receive the payments. The credit increased from $2,000 to $3,600 per child for children under the age of six and $2,000 to $3,000 for children over the age of 6. It also raised the age limit from 16 to 17 years old.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁶

What Is Clean Beauty?

What you put on your body is just as important as what you put in your body! This is why more people are choosing clean skincare and beauty products. Clean ingredients are better for the environment and often more gentle on your skin.

Clean beauty products don’t contain synthetic chemicals and ingredients that could harm your body or irritate your skin. Some of these synthetic ingredients include:

• Parabens
  
• Phthalates
  
• Oxybenzone
  
• Synthetic fragrances
  
• And many more

The exact definition is somewhat undefined, but the movement is becoming increasingly popular as people focus on healthy, environmentally-friendly options for their bodies, homes, and family.

Tip adapted from FOREO⁷

What is the beginning of sorrow and the end of sickness? Something you cannot express happiness without? Something that is always in risk, but never in danger?

Last week’s riddle: Karen is twice her brother’s age and half her father’s age. In 22 years, her brother will be half the father’s age. How old is Karen now? Answer: Karen is 22 years old.

Haleakala National Park, Maui, Hawaii 

Footnotes And Sources

^{1. The Wall Street Journal, February 3, 2023}

^{2. The Wall Street Journal, February 3, 2023}

^{3. The Wall Street Journal, February 3, 2023}

^{4. The Wall Street Journal, February 1, 2023}

^{5. CNBC, February 1, 2023}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

^{Copyright 2023 FMG Suite.}