September has been “Real”ly Hard

September Shakedown:

September has history of being the most difficult month for markets. Right as the real-time data was saying that inflationary was peaking and slowing, August CPI was reported worse than expected.

Equity markets fell last week with the core inflation momentum likely to force another 75-basis point increase this week. The S&P 500 fell -4.8%, with steep losses across all sectors, including over -6% drops in technology, industrials, telecom, and materials. While still above its June low, the S&P500 is down more than -10% since mid-August and again off nearly 20% since the record high set on the first day of 2022.

  • The cause of the declines was firmer-than-expected Bureau of Labor Statistics August CPI report. The headline number slowed again to 8.3% y/y, but core momentum was strong on a month-to-month basis largely due to lagging wages and owners’ rents numbers.


The lack in slowdown in month-to-month core inflation momentum has thrown out hope for a 2022 Fed pivot (which we never believed) that fueled the market rally during mid-June to mid-August. Both stock and bond markets are increasingly coming to the view that the Fed will ultimately take rates above 4% to crack underlying inflation.

  • While Powell has repeatedly said that the Fed and its committee is “data dependent”, the government data they review continues to show elevated and stubborn inflation. The Fed generally relies on data collected mainly by the Bureau of Labor and Statistics which has historically lagged what’s going on in the real time economy by months both on the way up and way down.


We’ve attached an interesting chart on “owners rent” and real estate costs showing the significant lag on the way up and down on what data the Fed uses. This compares versus the real time, real estate cost components such as copper, steel, and lumber and data on Zillow and other real estate sites. Catch this week 9/23, “Keeping you connected to your Money” podcast for more detail if interested.

Chris Salviati on Twitter: "The CPI's rent component had it's biggest MoM increase yet today (+0.8%), and is now up 5.8% YoY But YoY rent growth is already falling according to our


The declines in equities year to date have been mostly caused by a reduction in valuations and P/E ratios as real interest rates have risen from negative in 2020 and 2021 to over 1.5% currently for two-years.

From an earnings perspective, consensus S&P 500 earnings growth for 2022Q3 has dropped to 5.0% y/y from 11.1% y/y in July (2nd and 3rd quarters are normally slow in the US).

Full-year 2023 expectations have dropped to 7.9% y/y from 9.3% y/y in July. The direction of earnings revisions is downward as it usually is during summer.

Technically, the S&P 500 “failed” under its 200-day moving average this summer (now 4215), and this week’s drop has it back below the 50-day average (now 4055).


Stock Talk Podcast: September Stock Market Seasonals:

News or Noise: Volatility- It’s a Balancing Act:


This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.

Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy. Nothing in this content constitutes personalized investment advice. Any charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.

Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections have been accurate. No current or future forecasts and projections are guaranteed to be accurate.  And future forecasts may not be as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results will differ. Past performance is not indicative of future results. Investing involves the risk of loss.

September has been “Real”ly Hard
Article Name
September has been “Real”ly Hard
September has history of being the most difficult month for markets. Right as the real-time data was saying that inflationary was peaking and slowing, August CPI was reported worse than expected.
Publisher Name
Oak Harvest Financial Group
Publisher Logo