Stat of the Week

The market (S&P 500) is up 42.3% of the time on Valentine’s Day (average gain of 0.62%), as compared to non-Valentine’s Days, which are up 52.3% of the time (average gain of 0.75%), compared to Saint Patrick’s Day, which is up 60.0% of the time (average gain 0.95%).

- Howard Silverblatt, S&P Research

I’m not sure much can be drawn from the above statistic, but it clearly shows stocks do better with the “Wearin O’the Green” rather than on “Heart” day. The same might be said of the Super Bowl Effect, a theory that stock prices fall the year an AFC team wins the Super Bowl. This year’s Super Bowl winners, Kansas City Chiefs, are an AFC team. This theory used to have some statistical significance around correlation but has absolutely nothing to do with causation. Causation means that changes in one variable brings about changes in the other; there is a cause-and-effect relationship between variables. A correlation doesn’t imply causation, but causation always implies correlation.

No this isn’t a statistic lesson this week. But one piece of data that will have causation on the financial markets is inflation data. This week, the U.S. Bureau of Labor Statistics reported the year-over-year gain for the consumer price index was 6.4%, which is the seventh straight month of decline since its June peak. However, economists were expecting an even lower number of 6.2%

Consumer-price index, 12-month change

The biggest increases in the CPI data were attributed to housing with shelter accounting for much of the gains. "The index for shelter was by far the largest contributor to the monthly all items increase," U.S. Bureau of Labor Statistics said in its press release.

In our 7 views for the year, our belief was that inflation continues to fall and may drop to the 4-5% level in 2023. It could take much longer to get that rate down to the Fed’s stated target of 2.0%. The data this past week shows how stubborn inflation is likely to be in the coming quarters and that will complicate the Fed’s decision on interest rates throughout 2023.

Inflation data will be closely watched in 2023 as it could meaningfully impact the financial markets. The same can not be said of the Chiefs victory or upcoming St. Patrick’s Day holiday.

Source: S&P Research, U.S. Bureau of Labor Statistics

The opinions expressed are those of Harrison Financial Services as of February 17, 2023 and are subject to change. There is no guarantee that any forecasts made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment or security. Please remember that all investments carry some level of risk, including the potential loss of principal invested. Indexes and/or benchmarks are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance and are not indicative of any specific investment.