Broker Check

August 2023 Investylitics

Horizon Advisor Network Investment Committee August 10, 2023

Executive Summary

  • The stock market continued to climb a proverbial “wall of worry” throughout most of June and July before recently experiencing a minor and orderly pullback toward technical support levels.
  • The rise in stock prices has been juxtaposed against corporate earnings dropping during the 2nd quarter. This means that PE ratios are rising, and stock valuations have become more stretched.
  • This month's unemployment report came in below expectations for the second month in a row. However, the unemployment rate remains low and upward pressure on wages continues.
  • After pausing their interest rate increase campaign in June, the Fed raised interest rates another .25% at their meeting in late July. They have indicated that they are now data-dependent and could raise interest rates further if core inflation pressures persist.
  • In the face of another contentious and partisan debt ceiling debate, the rating agency Fitch downgraded the US credit rating from AAA to AA+. This is reminiscent of what S&P did after a similar episode in 2011.

The Horizon Advisor Network Investylitics Committee met on the afternoon of Wednesday, August 9th. Our team members were happy to share their thoughts and insights as it relates to their recent investment research and the economic outlook. There continue to be a number of economic and political events influencing the investment markets and sentiment at the present time.

The stock market continued to climb a proverbial “wall of worry” throughout most of June and July, often getting in significantly above its technical support levels, indicating a near-term overbought scenario. We have recently seen the market pull back toward its 50-day, moving average, which has provided support since early May.

Stocks have continued to rise even though earnings were negative again in the 2nd quarter. We know from history that stock prices cannot continue to move up without support from corporate earnings. Either prices will come down to reflect lower earnings, or earnings will have to catch up to the higher stock prices. We will continue to diligently watch how this tug-of-war plays out.

The July employment report was released on August 4th. The economy continued to show slowing job growth, even though the unemployment rate remained historically low at 3.5%. The US economy added 187,000 jobs, well below the 12-month average of 312,000. There were also negative revisions to the previous two months.

After not raising interest rates in June for the first time in 15 months, the Fed decided to raise rates another .25% at its meeting in late July. This is despite headline inflation numbers continuing to moderate. Core inflation, which excludes food and energy, continues to remain elevated. This is primarily due to housing prices and wage gains. The Fed has stated that it will continue to watch future data carefully to determine if it needs to raise rates further.

The increase in interest rates has pushed bond yields to levels higher than we have seen in more than 15 years. This has made bonds a more attractive asset class in diversified portfolios. We also want to remind you that when the Fed stops raising interest rates, and eventually begins to cut them due to slowing economic growth, historically bonds have provided attractive appreciation in addition to there are higher yields.

Finally, we would like to address the US credit downgrade by the rating agency Fitch. They lowered the US credit rating from AAA to AA+ in the wake of the recent debt ceiling negotiations and debate, which threatened to shut down the US government and potentially cause a default on Treasury securities. We would like to remind you that after a similar debt ceiling standoff in August 2011, Standard & Poor’s downgraded the US credit rating in a similar manner. While the initial news was disturbing, it did not create long-term negative effects on either U.S. stock or bond markets.

These credit rating actions should be a wake-up call to those on Capitol Hill that the growing level of US debt is not sustainable. Not only are we paying interest on a much higher level of debt, but the interest rate costs of that debt have also risen dramatically as the Fed has pushed interest rates up by 5 1/2% over the last 16 months. This has doubled the interest paid on our debt over the past three years to more than $1 trillion annually. Think of that, $1 trillion of taxes that US taxpayer money each is simply paying interest and providing no productive goods or services for the benefit of our citizens.

The committee will continue to monitor both the economic and political backdrops and their impact on our model portfolios and the assets we manage on behalf of you, our trusted friends, and clients. We stand ready to act if and when necessary. As always, should you have any questions regarding your unique situation, please do not hesitate to reach out to your advisor. Thank you so much for your continued trust.

© 2023 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein.  Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.  Past performance does not guarantee future results.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.


Jesse Hurst - Chair, Impel Wealth Management

Nathan Ollish - Impel Wealth Management

Clint Gautreau, Horizon Financial Group

Kevin Myers, ATL Global

Joy Schlie, FHT Financial Advisors

Dusty Green, Spencer Financial Inc.


Jesse W. Hurst, CFP®, AIF®
Financial Advisor

*Award Recipient Jesse Hurst 

*The 2021 ranking of the Forbes’ Best–in–State Wealth Advisors1 list was developed by SHOOK Research and is based on in–person and telephone due–diligence meetings to evaluate each advisor qualitatively and on a ranking algorithm that includes client retention, industry experience, review of compliance records, firm nominations, and quantitative criteria (including assets under management and revenue generated for their firms). Overall, approximately 32,725 advisors were considered, and 5,000 (approximately 15.3 percent of candidates) were recognized. The full methodology2 that Forbes developed in partnership with SHOOK Research is available at

1 This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you. 

2 Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.