American Investment Services, Inc.

Disciplined, Diversified, & Cost Effective

Oct. 2022 – Quarterly Review Of Capital Markets

The third quarter, like the second, brought a steady flow of negative news worldwide. Returns plummeted across all asset classes and across the globe. In the face of continued price inflation even cash failed to provide a refuge.

Events will always vacillate between good and bad, including extraordinary shocks and unpredictable business cycles. In the face of inevitable uncertainty, our methodology remains rules-driven and empirically based. We rely on over nine decades of capital market data that spans global wars, severe economic contractions, and relentless currency depreciation.

The Economy

When the third quarter began AIER’s leading indicators index was at 42, well below its peak of 92 in March 2021. A reading of 50 or below signals contraction is more likely than expansion. By quarter-end the index had plummeted to 25. If the economy is not already in recession, it appears increasingly likely that soon it will be.

Meanwhile rising prices continued to take a toll on consumers. During the quarter, the Consumer Price Index (CPI) increased 0.7 percent, and over the trailing 12 months registered 8.2 percent. AIER’s narrower Everyday Price Index was down 8.8 percent for the quarter but up by 10 percent over the past 12 months.

Faced with the dilemma of rising inflation and economic contraction, the Fed remains committed to taming inflation. The Federal Reserve Open Market Committee raised its target fed funds rate by 0.75 percent in September, following an identical increase in June.

Also In This Issue

Year-End Tax Considerations
Medicare Options And Annual Enrollment
The High-Yield Dow Investment Strategy
Recent Market Statistics
The Dow Jones Industrials Ranked By Yield
Asset Class Investment Vehicles

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