Weekly Market Commentary 01.09.2023
The Markets
It’s being called the “Goldilocks” report.
Last Friday, we learned that demand for workers in the United States remained strong in 2022. The unemployment rate dropped to 3.5 percent in December. (It was 3.7 percent in November.) That brought U.S. unemployment back to where it was before the pandemic – at the lowest level in more than 50 years, reported Megan Cassella of Barron’s.
“Hopes the Federal Reserve can tame inflation without widespread job losses mounted Friday after a government report showed robust hiring and a historically low unemployment rate paired with a cooling in wage growth. In some respects, the December jobs report offered a best-case scenario for the Fed — Americans keep their jobs but inflationary pressures of earnings are easing — giving policymakers room to slow the pace of interest-rate hikes,” reported Reade Pickert of Bloomberg.
Financial markets responded enthusiastically, making Friday the best day for U.S. stocks in more than a month. The Standard & Poor’s 500 Index, Dow Jones Industrial Average, and Nasdaq Composite Index all gained more than 2 percent on Friday, reported Bloomberg. The bond market rallied, too. Yields on U.S. Treasuries dropped lower across most maturities.
It’s important to note that not all companies were hiring in December. Thursday’s private payrolls report showed 235,000 jobs were created in December despite larger companies cutting more than 150,000 jobs. The drivers of jobs growth in the U.S. right now are small- and medium-sized businesses, which added enough jobs to offset layoffs by larger employers, reported Bloomberg.
Large technology firms are among the companies laying off workers. Many borrowed and spent significant amounts of money to grow during the pandemic when demand for tech products and services was high. However, consumer demand has diminished, and large tech firms have been forced to reevaluate. Weak performance among tech stocks is one reason 2022 was a dismal year for the Nasdaq Composite Index, reported Tae Kim of Barron’s.
Last week, major U.S. stock indices moved higher and the yield on the 10-year U.S. Treasury moved lower.
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WHAT HAPPENS IN VEGAS DOESN’T ALWAYS STAY IN VEGAS.
This month, Las Vegas hosted the Consumer Electronics Show, also known as CES. It’s where everyone goes to gawk at the latest technology innovations. Some of the wacky and delightful products will arrive in stores this year while others are aspirational. Here is a glimpse at what the future may hold in transportation:
Jetson-style flying vehicles. It seems that a flying car may soon be approved by the Federal Aviation Administration. Imagine a large SUV with wings that are tipped with propellers. The vehicle holds four people, runs on electric batteries, has a small gas engine (just in case), and can hover into a conventional parking space. The company that builds this space-age vehicle plans to start a ride-sharing service in 2026, reported Bree Fowler of CNet.
A smart baby stroller. It can’t tell you why the baby is crying or change a diaper, but a baby stroller equipped with artificial intelligence can make it easier to go up hill and stay in control when going downhill. It also will move on its own when your child wants to walk instead of ride, reported Popular Science.
Your new best friend. Fans of Herbie, The Love Bug and Knight Rider may be intrigued by the prospect of sentient vehicles. DEE, short for Digital Emotional Experience, is a futuristic mid-sized sedan intended to strengthen the bond between humans and autos. The model at CES featured “a digital assistant, color-changing technology and an augmented-reality windshield,” reported Nelson Aguilar of CNet.
Other notable transportation innovations included an electric pickup truck with “shadow mode” that allows it to follow its driver around, a dashboard security camera that records what’s happening inside and outside of the vehicle, and a surround sound system that makes you feel as though you’re at a concert.
Weekly Focus – Think About It
“If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people.” —Confucius, philosopher
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* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* 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 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* 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.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* 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.
Sources:
https://www.barrons.com/articles/december-jobs-report-today-51672960418 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-09-23_Barrons_The%20Good%20and%20Bad%20in%20the%20Jobs%20Report_1.pdf)
https://www.bloomberg.com/news/articles/2023-01-06/fed-gets-goldilocks-in-jobs-report-slower-wage-growth-solid-hiring (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-09-23_Bloomberg_Fed%20Gets%20Goldilocks%20in%20Jobs%20Report_2.pdf)
https://www.bloomberg.com/markets/stocks
https://www.bloomberg.com/news/articles/2023-01-05/us-companies-add-more-jobs-than-forecast-adp-data-show (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-09-23_Bloomberg_US%20Employers%20Add%20235%2c000%20Jobs_5.pdf)
https://www.barrons.com/articles/tech-stocks-employees-layoffs-consumer-demand-51673021476?mod=hp_HERO (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/01-09-23_Barroms_Techs%20Bill%20is%20Coming%20Due_6.pdf)
https://www.cnet.com/roadshow/news/great-scott-this-flying-car-could-roll-out-sooner-than-you-think/
https://www.popsci.com/gear/ces-2023-day-3-gadgets/
https://www.cnet.com/roadshow/news/ces-2023-showcases-the-automotive-technology-of-the-future/
https://www.cnet.com/roadshow/news/ces-2023-dolby-atmos-sounds-unbelievable-in-a-car/
