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October, 2021

Market Summary

Stock indexes were slightly negative for the quarter, giving back in September what was gained in July and August.  The technology-heavy Nasdaq has experienced a steeper decline as of late, much to do, perhaps with increasing talks of inflation settling in for longer than what the Federal Reserve three months ago described as a “transitory” period.  Several ingredients for increased pricing pressure now exist; 1) strong product demand as economies recover from world-wide shut downs and government stimulus money works its way through the system, 2) supply is limited because manufacturing is running below capacity for lack of full staffing and a shortage of raw materials.  Wait times for new home appliances now run from several weeks to months, depending upon the item.  3) Covid testing is also slowing the supply chain in ports of entry all over the world.  Cargo ships are backed up for weeks, slowing delivery of goods to retail stores.  Costco recently announced that it is going to contract its own private cargo ships to help keep their shelves stocked.  4) Energy prices have spiked because of increasing demand and a supply squeeze (hopefully short-term).  5) Labor shortages limit the ability for production of products to catch up with demand.  One major component here is that at least one parent has given up their job in many households for lack of childcare and Covid related disruptions to school attendance. 

The good news is that if at least some of the issues listed can be resolved, growth appears to be there for the taking.  In the U.S., there are more job openings than there are unemployed and trillions of dollars sits in cash waiting to be deployed by consumers and investors alike.  Stocks may stall for a spell as all of this gets sorted out.  An environment of growing Gross Domestic Product (GDP) combined with a rising consumer price index (CPI) is typically bullish for stocks. 


Sincerely,


Joe Tomkiewicz MS, CFPr

President

Sierra Financial Advisory


Michael Tomkiewicz MA

Registered Investment Advisor Representative

Sierra Financial Advisory

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