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Week In Review – December 5 2022

Week In Review – December 5 2022

December 5, 2022 by Perry Sikes

The U.S. Economy Created 263,000 Jobs in November, Unemployment Was Unchanged at 3.7%…The jobs number came in solidly above the 200,000 estimate.

What it means— Well, that’s going to leave a mark on all of the investors, who were certain that a weak employment report would drive the Fed to a harder pivot. Not only did the jobs number surprise most people, but also average earnings popped 0.6% last month. Chair Powell has mentioned possible wage inflation in a strong jobs market as a potential driver for inflation. This report brought that possibility to the fore. While tech companies are “right sizing,” health care along with hospitality and leisure are still adding jobs and looking for workers. In the weeks ahead, it will be interesting to see if some people who lost their jobs in tech take positions in other fields. We’ll find out whether that’s the case if the number of people filing continued jobless claims rises in the weeks ahead. For now, investors have given back a little less than half the gains from Wednesday.

Federal Reserve Chair Jay Powell Confirmed the Central Bank Will Raise Rates at a Slower Pace…Following other Fed officials and expectations from the minutes of the last meeting, Powell all but told everyone that the bankers will raise rates 0.50% at the December meeting, down from the 0.75% of the last several meetings.

What it means— Powell’s comments echoed what many central bankers have said in recent weeks and what the minutes from their most recent meeting reflected. The Fed intends to raise rates at a slower pace but likely will do so longer than investors anticipate, just to make sure that inflation is dead. You might think this would be a nothingburger, but trading algorithms treated it like a Fed pivot and sent markets up like a rocket ship. Perhaps they expect the central bankers to fold when inflation eases in early 2023 or when the economy flags early next year. Whatever the reason, Powell must be wondering if he gave the wrong speech, the one that said, “Just kidding, the next move in rates is down.” The herd is usually right, but this time it looks like it got ahead of itself. We should go lower before we move higher.

Personal Consumption Expenditures Index (PCE) Eases From 6.3% to 6.0%, Core Down From 5.2% to 5.0%… The Fed’s preferred inflation measures both fell from their highs in September.

What it means— Before we break out the bubbly, let’s remember what makes the PCE different from the CPI. The PCE adjusts to consumers’ changing spending habits more quickly than the CPI. The PCE will capture our move from ribeye steak to sirloin faster, which makes inflation “go away,” because we’re no longer spending on the more-expensive meat. Don’t fret about our falling standard of living, that just gets lost in the mix.

While some people might see this is a good thing, the smart people at the Fed know what’s happening. The central bankers won’t take this as an “all clear” signal. We shouldn’t, either.

San Francisco Police Department(SFPD) Clarifies That New Robots Will Have Explosives But Not Guns… Trying to clear up a misunderstanding, the SFPD told local groups that their new robots will carry “intermediate force” options, or explosives, that might harm people if they are close enough when they blow up. The SFPD explained it would only happen if civilians or police were in danger or if the police could not safely approach suspects. There was no word on whether the robots would be tasked with one of the most pressing issues in San Francisco, picking up poop on the streets and sidewalks, or with stopping the rampant shoplifting.

 

Data supplied by HS Dent Research

“When the facts change, I change my mind.

What do you do?” ~ John Maynard Keynes

Our plan is “the plan will change.”

What is your plan?

 

Relative strength measures the price performance of a stock against a market average, a selected universe of stocks or a single alternative holding. Relative strength improves if it rises faster in an uptrend, or falls less in a downtrend. It is easily applied to individual positions in your portfolio and to sectors and asset classes.

 

A copy of our form ADV Part 2 is available online.

 

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Investor Resources, Inc. (“Investor Resources”), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Investor Resources.  Please remember to contact Investor Resources, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Investor Resources shall continue to rely on the accuracy of information that you have provided.   Investor Resources is neither a law firm, nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice.  A copy of Investor Resources’ current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at https://www.investorresourcesinc.com/.  Clients Please Note: Advise us if you have not been receiving account statements (at least quarterly) from Charles Schwab & Co.™

 

Filed Under: Federal Reserve, Inflation, Unemployment Tagged With: federal reserve, jobs, PCE, unemployment

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