Weekly Market Commentary

Weekly Market Commentary

How Are Your Investments Doing Lately?  Receive A Free, No-Obligation 2nd Opinion On Your Investment Portfolio >

Weekly Financial Market Commentary

January 24, 2022

Our Mission Is To Create And Preserve Client Wealth

When is a barometer not a barometer?

It’s widely recognized that people do not make perfect financial decisions. In fact, many investors rely on mental shortcuts when asked to make complex decisions. That may be why there are theories that correlate stock market performance to football, hemlines and sales of headache remedies.

For example, last week several articles about the U.S. stock market used the adage, “As goes January, so goes the year.” The saying describes the January Barometer, which holds that the performance of the Standard & Poor’s 500 Index in January has predictive value. If stocks gain in January, then the Index may gain over the full year. If stocks decline in January, then the Index may suffer losses over the full year.

According to Jeffrey Hirsch and Christopher Mistal of the Stock Trader’s Almanac, the January Barometer has been 84.5 percent accurate since 1950. Of course, the January Barometer was invented in 1972, and when you evaluate its performance since then:

“The January Barometer, in fact, fails real-time tests at the 95 percent confidence level that statisticians often use when determining whether a pattern is genuine. Since 1972 its track record is indistinguishable from a random pattern,” wrote Mark Hulbert in MarketWatch.

You don’t have to look far to find flaws in the pattern.

In 2021, the Standard & Poor’s (S&P) 500 Index fell during the month of January and gained 26.8 percent over the full year. The same thing happened in 2020. The S&P 500 declined in January and finished the year with a gain of more than 16 percent. Perhaps this phenomenon will one day be known as the “Pandemic Exception.”

The real takeaway from the past two years isn’t that the January Barometer is flawed, it’s that the U.S. economy, companies and financial markets have proven to be quite resilient.

Last week, major U.S. stock indices moved lower on uncertainty about inflation, the pandemic and Federal Reserve policy, reported Mark DeCambre of MarketWatch. The Dow Jones Industrial Average declined 4.6 percent. The S&P 500 was down 5.7 percent, and the Nasdaq Composite dropped 7.6 percent, reported Ben Levisohn of Barron’s.

WHICH country is the most innovative? The silver lining of the pandemic may be found in innovation, which has flourished as companies, economies and countries have adapted to difficult circumstances. 

 The Global Innovation Index (GII) tracks 80 indicators that inform innovation. The indicators are grouped into seven categories:

  • Institutions: Political, regulatory and business environments.
  • Human capital and research: Education and research and development.
  • Infrastructure: Information and communication technologies, general infrastructure and ecological sustainability.
  • Market sophistication: Credit, investment, trade, diversification and market scale.
  • Business sophistication: Knowledge workers, innovation linkages and knowledge absorption.
  • Knowledge and technology outputs: Knowledge creation, impact and diffusion.
  • Creative outputs: Intangible assets, creative goods and services, and online creativity.

In 2021, the top-three innovative countries by income group were:

High-income countries

No. 1. Switzerland, with strength in knowledge and technology outputs, infrastructure and creative outputs.

No. 2. Sweden, with strength in business sophistication, human capital and research, and knowledge and technology outputs.

No. 3. United States, with strength in knowledge and technology outputs and market and business sophistication

Upper-middle income countries

No. 1. China, with strength in knowledge and technology outputs and business sophistication.

No. 2. Bulgaria, with strength in knowledge and technology and creative outputs.

No. 3. Malaysia, with strength in knowledge and technology outputs and market sophistication.

Lower-middle income countries

No. 1. Vietnam, with strength in market sophistication and creative outputs.

No. 2. India, with strength in knowledge and technology outputs and market sophistication.

No. 3. Ukraine, with strength in knowledge and technology outputs and human capital and research.

Low-income countries

No. 1. Rwanda, with strength in institutions and business sophistication.

No. 2. Tajikistan, with strength in knowledge and technology outputs and market sophistication.

No. 3. Malawi, with strength in knowledge and technology outputs and market sophistication.

Switzerland, Sweden, the United States, the United Kingdom and South Korea were the most innovative countries in the world, overall. China was the only middle-income economy among the top 30 most innovative economies in the world.

Weekly Focus – Think About It
“If you have urgent current expenses to cover, then future priorities like college and retirement fall off your radar because they are simply less pressing. Scarcity of attention prevents us from seeing what’s really important. The psychology of scarcity engrosses us in only our present needs.”
—Sendhil Mullainathan, University of Chicago professor and author

Most Popular Financial Stories

Special important safety notice

Special important safety notice

Dear Friends, Recently, I have been reading about a sharp increase in auto break-ins in my neighborhood and in several around me. As the COVID-19 variant surges...

read more
The Legacy of Labor Day

The Legacy of Labor Day

Athlete and CEO Tyrone Ross Jr. often says, “Legacy is greater than résumé.”1Ross frequently shares pictures of his nieces and nephews with this saying, noting...

read more
Special Market Update

Special Market Update

A Whole Flock of CanariesBack in 1911, British coal miners started taking canaries into the mines. Because of the bird’s sensitivity to carbon monoxide, an ill...

read more
LITHIUM !!!

LITHIUM !!!

LithiumThat’s a Drug, Right?Yes, But It’s Also the Next Investment IdeaEverybody has probably heard of Lithium as a drug. It helps those who suffer from bipolar...

read more

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Weekly Market Commentary

Weekly Market Commentary

How Are Your Investments Doing Lately?  Receive A Free, No-Obligation 2nd Opinion On Your Investment Portfolio >

Weekly Financial Market Commentary

January 18, 2022

Our Mission Is To Create And Preserve Client Wealth

Is the economy doing well, or not?

If you skimmed the headlines last week, you may have seen that retail sales – the purchases we make from stores in-person or online – declined 1.9 percent in December. The statistic may have raised questions about the strength of the economy. After all, how could retail sales move lower during the holiday season?

Media headlines speculated that the spread of the Omicron variant, rising inflation, and consumer grumpiness were to blame. Economists had other ideas, according to Logan Moore and Megan Cassella of Barron’s. “Consumers had long been expected to pull forward their holiday shopping to get ahead of any supply chain backlogs, economists say.”

As you think back on when you did your holiday shopping, there is another important question to ask: What time frame does the 1.9 percent capture?

The retail sales report showed that sales were:

·         Down 1.9 percent month-to-month (comparing November 2021 to December 2021)

·         Up 16.9 percent year-to-year (comparing the month December 2020 to the month of December 2021)

·         Up 19.3 percent for the year (comparing 2020 retail sales to 2021 retail sales)

So, back to the original question: is the economy doing well, or not?

If you are judging based on retail sales – or any other piece of economic data – your conclusion is likely to depend on the time frame the data reflect.

For instance, if retail sales are down 1.9 percent from November to December, it tells a different story than if retail sales are up 19.3 percent for the year. The story may also be affected by the fact that 2021’s retail sales gain built on 2020’s gain. Retail sales rose 3.1 percent from 2019 to 2020, despite the pandemic.

Of course, the story of the dip in month-to-month numbers could be that we are at an inflection point. Barron’s reported, “While the December report showed an unexpected drop in retail sales from the catapult in spending November data showed, the slowdown is expected to be short-lived. Put more simply: ‘Don’t panic’…”

Last week, major U.S. stock indices moved lower, reported Ben Levisohn of Barron’s.

It’s a beauty revolution! Many caretakers have experienced that jolting realization: It’s too quiet! Where are the children? Then, a discovery that leaves them uncertain whether to yell, laugh, or cry. The kids have hijacked a makeup bag and given themselves – and the room – a new look. Sparkling shadow on cheekbones. Lip paint on toenails and eyebrows. Brown, red, blue, and green streaks on every surface. Palettes of cosmetics ruined.

A new trend in beauty may change this childhood rite of passage: virtual makeup.

The coronavirus has made cosmetic counters far less enticing than they once were, a change in circumstance that led beauty companies to develop new strategies for delivering personalized beauty experiences, reports Jennifer Kingson of Axios.

Beauty companies are teaming up with technology firms that specialize in artificial intelligence (AI) and augmented reality (AR) to develop apps that let people try on makeup virtually, according to Daniela Morosini of Vogue Business.

“In recent years, activity in the beauty [mergers and acquisitions] sector was often focused on larger cosmetic conglomerates buying up indie beauty brands. Now, the pendulum is swinging towards Silicon Valley – a tech ‘arms race’ is underway.”

The trend isn’t limited to makeup. One fragrance and cosmetics firm acquired a company with technology that interprets fragrances through images and patterns of colors.7

“Customers love playing with these apps so much that companies see big revenue boosts after introducing them,” reported Axios.

The new technology may change the way people shop for makeup, fragrance, and other beauty products. It also may put an end to childhood makeup-bag raids. Children will be able to experiment all they want, sitting in front of a screen.

Then again, maybe not.

Weekly Focus – Think About It
“The most beautiful people we have known are those who have known defeat, known suffering, known struggle, known loss, and have found their way out of the depths. These persons have an appreciation, a sensitivity, and an understanding of life that fills them with compassion, gentleness, and a deep loving concern. Beautiful people do not just happen.”
—Elisabeth Kübler-Ross, psychiatrist

 

Most Popular Financial Stories

Special important safety notice

Special important safety notice

Dear Friends, Recently, I have been reading about a sharp increase in auto break-ins in my neighborhood and in several around me. As the COVID-19 variant surges...

read more
The Legacy of Labor Day

The Legacy of Labor Day

Athlete and CEO Tyrone Ross Jr. often says, “Legacy is greater than résumé.”1Ross frequently shares pictures of his nieces and nephews with this saying, noting...

read more
Special Market Update

Special Market Update

A Whole Flock of CanariesBack in 1911, British coal miners started taking canaries into the mines. Because of the bird’s sensitivity to carbon monoxide, an ill...

read more
LITHIUM !!!

LITHIUM !!!

LithiumThat’s a Drug, Right?Yes, But It’s Also the Next Investment IdeaEverybody has probably heard of Lithium as a drug. It helps those who suffer from bipolar...

read more

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Weekly Market Commentary

Weekly Market Commentary

How Are Your Investments Doing Lately?  Receive A Free, No-Obligation 2nd Opinion On Your Investment Portfolio >

Weekly Financial Market Commentary

January 10, 2022

Our Mission Is To Create And Preserve Client Wealth

​Here’s a little story about a group called the Fed…

In the 1950’s, then Fed Chair William McChesney Martin described the Federal Reserve as “the chaperone who has ordered the punch bowl removed just when the party was really warming up.”

In 2020, the opposite was true. The Fed, along with fiscal policymakers, filled the stimulus punch bowl to the brim to keep the country from falling into a recession or depression. In November 2021, Fed Vice Chair Richard Clarida explained:

“The COVID-19 pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the U.S. and global economies since the Great Depression. Gross domestic product (GDP) collapsed at a nearly 33 percent annual rate in the second quarter of 2020. More than 22 million jobs were lost in just the first two months of the crisis, and the unemployment rate rose from a 50-year low of 3.5 percent in February to a postwar peak of almost 15 percent in April 2020…The fiscal and monetary policy response in the United States to the COVID crisis was unprecedented in its scale, scope, and speed.”

That stimulus helped the economy recover quickly. As a result, demand for goods rose and exceeded supply, pushing prices higher. The Fed did not act immediately to tame inflation because its members believed price increases would subside as supply chain issues eased. Then, in November, inflation was 6.8 percent year-over-year, as measured by the Consumer Price Index. The cost of shelter, which typically is not transitory, was up more than 3 percent year-over-year.

In December, the Fed adjusted its outlook on inflation, removing the word “transitory,” and accelerated the pace at which it would reduce monetary stimulus (i.e., remove the punchbowl). Fed Chair Jerome Powell explained, “…in light of the strengthening labor market and elevated inflation pressures, we decided to speed up the reductions in our asset purchases. As I will explain, economic developments and changes in the outlook warrant this evolution of monetary policy, which will continue to provide appropriate support for the economy.”

Major United States stock indices dropped lower after Powell’s remarks before climbing to new highs in December.

Last Wednesday, the minutes of the Fed’s December meeting were released. Investors appeared to be surprised by the changes in the Fed’s change in tone, reported Ben Levisohn of Barron’s. Share prices tumbled again and the yield on 10-year Treasury notes moved higher.

It all depends on who you ask…Last week’s unemployment report illustrated, once again, a remarkable divergence in the messages delivered by the data. Here is what we learned:

·         The U.S. added 199,000 jobs. When the Bureau of Labor Statistics (BLS) calculates the number of jobs added to the U.S. economy each month, its data come from an employer survey.

Last week’s report showed that 199,000 jobs were created in December. That was a lot lower than expected. Dow Jones estimated 422,000 new jobs would be created, according to Jeff Cox of CNBC. The low employment number suggests U.S. economic growth may be slowing, reported Colby Smith, Andrew Edgecliffe-Johnson and Christine Zhang of Financial Times.

Of course, the number of jobs created in December may be revised higher over the next two months. Last year, “…revisions from the first estimate to the third and final release…added nearly 1 million jobs to the initial releases – 976,000 to be exact, through October,” reported CNBC. That was the highest upward adjustment ever in a single year, according to Financial Times.

·         The unemployment rate fell to 3.9 percent. When the BLS calculates the unemployment rate, its data come from a household survey.

 In December, that survey showed the unemployment rate fell to 3.9 percent overall. Unemployment rates varied by race: 3.2 percent for white people, 7.1 percent for Black people, 3.8 percent for Asian people, and 4.9 percent for Hispanic people. The low overall unemployment rate suggests the economy is experiencing strong growth.

 Rising wages and record numbers of job openings also indicate economic strength. Average hourly earnings for U.S. workers rose 4.7 percent in 2021, and there were 10.6 million job openings in November, according to last week’s BLS Job Openings and Labor Turnover report. The report indicated that 6.7 million people were hired and 6.3 million left their employers.

Why is the unemployment data wonky? An expert cited by Financial Times reported, “The economic fundamentals have been shifting at unprecedented speed. Not in my lifetime and not in the lifetime of most people alive today have we seen…an economic recovery that has been as rapid as it has been since the spring of 2020…The challenges of economic measurement in a pandemic environment are enormous.”

Weekly Focus – Think About It

“Facts are stubborn things, but statistics are pliable.”
—Mark Twain, writer

Most Popular Financial Stories

Special important safety notice

Special important safety notice

Dear Friends, Recently, I have been reading about a sharp increase in auto break-ins in my neighborhood and in several around me. As the COVID-19 variant surges...

read more
The Legacy of Labor Day

The Legacy of Labor Day

Athlete and CEO Tyrone Ross Jr. often says, “Legacy is greater than résumé.”1Ross frequently shares pictures of his nieces and nephews with this saying, noting...

read more
Special Market Update

Special Market Update

A Whole Flock of CanariesBack in 1911, British coal miners started taking canaries into the mines. Because of the bird’s sensitivity to carbon monoxide, an ill...

read more
LITHIUM !!!

LITHIUM !!!

LithiumThat’s a Drug, Right?Yes, But It’s Also the Next Investment IdeaEverybody has probably heard of Lithium as a drug. It helps those who suffer from bipolar...

read more

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

Sources:
https://fraser.stlouisfed.org/title/statements-speeches-william-mcchesney-martin-jr-448/address-new-york-group-investment-bankers-association-america-7800
https://www.federalreserve.gov/newsevents/speech/clarida20211130a.htm
https://www.cnbc.com/2021/09/29/fed-chair-powell-calls-inflation-frustrating-and-sees-it-running-into-next-year.html
https://www.bls.gov/news.release/cpi.nr0.htm
https://www.bls.gov/news.release/cpi.t01.htm
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20211215.pdf
https://www.reuters.com/markets/europe/indexes-mixed-wall-street-heads-weekly-loss-2021-12-17/
https://www.cnbc.com/2021/12/30/stock-market-futures-open-to-close-news.html
https://www.barrons.com/articles/stock-market-tech-stocks-federal-reserve-51641603791?refsec=the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-10-22_Barrons_The%20Feds%20Hawkish%20Turn%20Clobbered%20Your%20Favorite%20Stocks_9.pdf)
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.bls.gov/bls/empsitquickguide.htm
https://www.cnbc.com/2022/01/07/hiring-falters-in-december-as-payrolls-rise-only-199000.html
https://www.ft.com/content/73c26e1b-ebf6-4dd4-9930-132c01db6929 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-10-22_Financial%20Times_Hottest%20Its%20Ever%20Been_14.pdf)
https://www.cnbc.com/2021/12/03/nearly-1-million-more-jobs-were-created-this-year-than-the-government-first-estimated.html
https://www.ft.com/content/4f1155be-1a5f-4fd2-ba57-b15bdb273c00 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-10-22_Financial%20Times_US%20Struggles%20to%20Measure%20Jobs%20Growth%20as%20Pandemic%20Distorts%20Labour%20Market%20Data_16.pdf)
https://www.bls.gov/news.release/jolts.nr0.htm
https://www.goodreads.com/quotes/tag/statistics

Weekly Market Commentary

Weekly Market Commentary

How Are Your Investments Doing Lately?  Receive A Free, No-Obligation 2nd Opinion On Your Investment Portfolio >

Weekly Financial Market Commentary

January 3, 2021

Our Mission Is To Create And Preserve Client Wealth

2021 was a fizzing mints-in-soda kind of year.

Everything seemed to shoot higher – from COVID-19 cases and vaccinations to economic growth and global stock markets. Everything except for optimism. As the year came to an end, a CBS News poll found that 40 percent of Americans felt 2021 was mostly filled with sadness, although almost three out of four people polled said they were hopeful for 2022.

As we head into the new year, let’s a look back at 2021.

·         Vaccinations took off. At the start of the year, very few people were vaccinated against COVID-19. Despite issues with vaccine reluctance and availability, by the end of the year more than 58 percent of the world’s population had received at least one dose of a COVID-19 vaccine.

 United Arab Emirates led the way with 99 percent of the nation’s population vaccinated. Nigeria lagged with about 95 percent of the population unvaccinated. More than 61 percent of Americans were fully vaccinated, and another 12 percent were partially vaccinated, according to Our World in Data.

·         United States’ economic growth was stronger than it has been in decades. In December, The Conference Board estimated the U.S. economy grew by 6.5 percent annualized in the fourth quarter of 2021, and 5.6 percent over the full year. That’s the strongest growth in decades, according to Ben Levisohn of Barron’s. The publication reported the lesson of the last century is, “Don’t underestimate the resilience of the U.S. economy.”

 ·         Inflation rose faster than it has in decades. Consumer prices increased at the fastest pace since 1982. By December, prices were up almost 7 percent for the year in the U.S., according to The Economist. As rents and wages increased, the Federal Reserve changed the language it used when discussing inflation, removing the word “transitory.” Some economists say inflation will subside in 2022, while others believe it will be more enduring, according to a report from Goldman Sachs.

·         Consumer sentiment declined and then rose in December. Overall, consumers were less optimistic during 2021, largely because of inflation. About 25 percent of households said inflation was eroding their standard of living.

In December, however, optimism moved sharply higher “…primarily due to significant gains among households with incomes in the bottom third of the distribution. Indeed, the bottom third expected their incomes to rise during the year ahead by 2.8%, up from 1.8% last December,” reported Richard Curtin, the University of Michigan’s Surveys of Consumers chief economist. That’s the biggest gain in 22 years.

·         The Federal Reserve took a hawkish turn. As inflation persisted, the Fed decided to accelerate monetary policy tightening by tapering bond purchases more quickly than expected. In December, 12 of the 18 Federal Open Market Committee members indicated they anticipate at least three rate hikes in 2022. The increases would lift the Fed funds rate from zero to 0.25 percent to 0.75 to 1.0 percent.

·         Major U.S. stock indices set record after record. After trading closed on December 31, 2021, “All three major U.S. stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999,” reported Stephen Culp and Echo Wang of Reuters.

·         Corporate earnings proved resilient. Despite supply chain issues, labor shortages, wage increases and inflation, U.S. company earnings were exceptional. Earnings, which reflect company profits, were up 45.1 percent year-over-year. That’s well above the trailing 10-year average annual earnings growth rate of 5.0 percent, according to John Butters of FactSet.
 
·          China cracked down on “capitalist excesses.” “More than $1trn was wiped off the collective market capitalization of some of the world’s largest internet groups…Entire business models – online tutoring, for example – were laid waste. Investors needed to hear that an end was in sight. But on August 8th the Communist Party issued a five-year blueprint aimed at reshaping China’s tech industry – confirming to even the most optimistic industry watchers that the abrasive changes would continue well into 2022,” explained The Economist.

 ·         Finding income in the bond market was challenging. “Emerging-market bonds were supposed to be dragged down this year as central banks moved toward withdrawing stimulus. Instead, the best-performing global debt was all from developing nations…South Africa, China, Indonesia, India and Croatia topped the rankings of 46 markets around the world in 2021,” reported Lilian Karunungan and Masaki Kondo of Bloomberg.

The latest fashion: Resale and Reuse…If there was a spectrum that reflected the value and longevity of everything we owned, consumables (coffee and cell phones) might be at one end, durables (automobiles and appliances) in the middle, and items with enduring value (homes and collectibles) on the other end, according to The Economist.

Clothing might belong on different parts of the spectrum. Everyday socks might be on one end while Audrey Hepburn’s little black dress from Breakfast at Tiffany’s and Neil Armstrong’s Apollo 11 spacesuit ranged toward the other end.

Currently, people spend less on clothes, overall, but buy more than they once did. Often, items are worn a few times and then discarded. As a result, the fashion industry has a sustainability problem. The Economist reported:

“…industry studies reckon that clothing manufacture and distribution account for between 2% and 8% of global carbon emissions. The fashion industry probably emits more carbon than aviation (3% of emissions) or shipping (2%).”

With consumers prioritizing sustainability, fashion has begun to change. More people are cleaning out their closets and selling clothing online, according to the 2021 Resale Report. As a result, the resale clothing marketplace is expected to double, reaching $77 billion, during the next five years.

That may be the tip of the iceberg. Thirty-six billion pieces of clothing are thrown out by Americans each year, and estimates suggest that 95 percent could be recycled or reused.

Weekly Focus – Think About It

“Hope
Smiles from the threshold of the year to come,
Whispering ‘it will be happier’…”
—Alfred Lord Tennyson, poet

It has been an honor to work with you during 2021. We look forward to seeing you in the new year!

Most Popular Financial Stories

Special important safety notice

Special important safety notice

Dear Friends, Recently, I have been reading about a sharp increase in auto break-ins in my neighborhood and in several around me. As the COVID-19 variant surges...

read more
The Legacy of Labor Day

The Legacy of Labor Day

Athlete and CEO Tyrone Ross Jr. often says, “Legacy is greater than résumé.”1Ross frequently shares pictures of his nieces and nephews with this saying, noting...

read more
Special Market Update

Special Market Update

A Whole Flock of CanariesBack in 1911, British coal miners started taking canaries into the mines. Because of the bird’s sensitivity to carbon monoxide, an ill...

read more
LITHIUM !!!

LITHIUM !!!

LithiumThat’s a Drug, Right?Yes, But It’s Also the Next Investment IdeaEverybody has probably heard of Lithium as a drug. It helps those who suffer from bipolar...

read more

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

Sources:
https://www.cbsnews.com/news/americans-opinion-poll-on-2021-2022/
https://ourworldindata.org/covid-vaccinations
https://www.conference-board.org/research/us-forecast
https://www.barrons.com/articles/stock-market-2021-51640910494?refsec=up-and-down-wall-street (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_Barrons_The%20Stock%20Market%20Had%20a%20Wonderful%20year.%20Too%20Bad%20No%20One%20Enjoyed%20It_4.pdf)
https://www.barrons.com/articles/us-economy-stock-market-history-51640204442 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_Barrons_Lesson%20of%20the%20Century%20Dont%20Underestimate%20the%20Resilience%20of%20the%20U.S.%20Economy_5.pdf)
https://www.economist.com/finance-and-economics/2021/12/18/after-a-shocker-in-2021-where-might-inflation-go-in-2022 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_The%20Economist_After%20a%20Shocker%20in%202021%20Where%20Might%20Inflation%20Go%20in%202022_6.pdf)
https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215a.htm
https://www.goldmansachs.com/insights/pages/gs-research/inflation-here-today-gone-tomorrow/inflation-here-today-gone-tomorrow.pdf
http://www.sca.isr.umich.edu (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_Survey%20of%20Consumers%20Final%20Results%20for%20December%202021_9.pdf)
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20211215.pdf
https://www.reuters.com/markets/europe/wall-street-ends-tumultuous-year-near-record-highs-2021-12-31/
https://www.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_121721A.pdf (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_The%20Economist_Xi%20Jinpings%20Crackdown%20on%20Chinese%20Tech%20Firms%20Will%20Continue_13.pdf)
https://www.economist.com/the-world-ahead/2021/11/08/xi-jinpings-crackdown-on-chinese-tech-firms-will-continue
https://www.bloomberg.com/news/articles/2021-12-26/global-bond-winners-for-2021-all-came-from-emerging-markets (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_Bloomberg_Global%20Bond%20Winners%20for%202021%20All%20Came%20from%20Emerging%20Markets_14.pdf)
https://www.economist.com/christmas-specials/2021/12/18/fashion-as-an-asset-class (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-03-22_The%20Economist_Fashion%20as%20an%20Asset%20Class_15.pdf)
https://www.thredup.com/resale/#size-and-impact
https://www.goodreads.com/quotes/tag/new-year

LinkedIn
LinkedIn
Share
RSS
6Lc_psgUAAAAAA9c7MediJBuq3wAxIyxDSt73c9j