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Week In Review – November 7 2022

Week In Review – November 7 2022

November 7, 2022 by Perry Sikes

U.S. Economy Created 261,000 Jobs in October, Unemployment Rate Ticked Up From 3.5% to 3.7%… The jobs number was higher than the 205,000 forecast, while the labor force participation rate fell slightly from 62.3% to 62.2%.

What it means— Missing the jobs number by 55,000 in an economy of 160 million is a rounding error. It was more telling that the participation rate eased a bit instead of ticking higher, which I would have expected as people went back to work once their stock portfolios dropped. The small amount of softness showed up as slow wage gains, which increased just 0.4% for the month and 4.7% for the year, far below the inflation rate of 8.2%. This report will give the Fed cover to raise rates in December and to stick to its hawkish stance.

The Federal Reserve Raised Rates 0.75%, Will Look at Cumulative Effects as it Considers Future Moves…The central bankers remain committed to slaying inflation but likely will raise rates at a slower pace at future meetings to measure how it is affecting the economy.

What it means— The monetary policy statement seemed to say all the right things for equity buyers, but Chair Powell painted a grim picture in his press conference. Yes, the central bankers might raise rates at a slower pace, but they likely will raise rates longer and to a higher eventual rate than the bankers thought they would have just a couple of months ago. That assessment took the joy out of stocks and sent the indices lower. Powell reiterated that fighting inflation is painful and it’s likely we will get job losses and higher unemployment before it’s over. Meh, maybe. We’ll definitely get volatility through the rest of the year, but we might see inflationary pressure ease by January, which will have the equity bulls jumping in so as not to miss the liftoff.

ISM Manufacturing Index at 50.2, ISM Services Index at 54.4… Readings above 50 indicate growth, while readings below 50 indicate economic contractions.

What it means— The manufacturing index has been sitting near 50 for some time, indicating that consumers are prioritizing experiences over buying more goods. While the services index remains solidly above 50, it’s been declining. Taken together, the indices show that the economy is losing steam.

German Energy Company Is Dismantling Wind Turbine to Expand Coal Mine… Energy firm RWE reported that it is removing at least one wind turbine so that it can expand a nearby lignite, or brown coal, open pit mine. The company plans to bring three lignite-fired units that were on standby back online. A spokesman for RWE called the situation “paradoxical.”

 

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: Economy, Energy, Federal Reserve, Unemployment Tagged With: federal reserve, ism manufacturing, jobs, unemployment rate

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