12/23 Market View Weekly: By The Numbers

Weak Results for Markets

Although the Dow managed to post a small weekly gain, the S&P 500 and the NASDAQ fell for the third week in a row. With one week left in 2022, the S&P 500 was down 18% year to date on a total return basis and on track for its worst year since 2008.

The U.S. Federal Reserve’s preferred gauge for tracking inflation showed a further cooling of price hikes. The government reported on Friday that its Personal Consumption Expenditures Price Index rose at an annual 5.5% rate in November, down from a 6.1% in October. Excluding food and energy prices, prices rose at a 4.7% annual rate versus 5.0% in October.1

Observations

Blue Chip stocks as defined by the DJ Industrial Average lead U.S. domestic equities for the week +0.86%

Domestic stocks were generally down on the week, with the tech-heavy Nasdaq -1.93% falling the most despite recording its single-best daily gain since November on Wednesday.

Emerging markets were negative while international stocks gained, with the MSCI EM and MSCI EAFE Indexes returning – 0.24% and +0.37%, respectively.

Bond trading closed early on Friday for the Christmas holiday and was relatively negative across the board; global bonds outperformed domestic bonds.

Inflation Proof: “Inflation, the curse of our pocketbooks and the Federal Reserve, has hit almost every good in the U.S. But the price of a beloved toy has managed to hover around $1 — for more than 50 years. In a time when the average increase in suggested manufacturers’ retail exceeds 15%, according to The Toy Book, Hot Wheels have bucked the trend. "It is exceptionally rare to find a toy that maintains its price for a few years, let alone more than five decades," Zahn is the editor-in-chief of The Toy Book, said. "Hot Wheels are an anomaly in that the continued sales volume and razor-sharp production pipeline manage to keep costs just low enough to maintain that sweet $1 price point.”3

A World Cup Win is Very Rich: On Sunday, December 18, Argentina team captain Lionel Messi held up the World Cup trophy, beating France 4-2 on penalty kicks, after deadlocking 3-3 at the completion of extra time. The victory is likely the crowning achievement and a storybook ending to the 35-year-old Messi’s international playing career. The win represents the 3rd time Argentina has hoisted the trophy, following victorious campaigns in 1978 and 1986. “Argentina will earn $42 million in prize money for the Argentine Football Association while France earned $30 million for the French Football Federation. France won the World Cup in 2018 and the country’s federation got $38 million from FIFA’s $400 million prize fund. This year, FIFA’s prize fund was increased to $440 million.” Each national federation that participated in the 2022 World Cup will earn at least $9 million for their efforts.4

1. John Hancock Investment Management
2. Data obtained from Bloomberg as of 12/23/2022
3. Hot Wheels are one of the most inflation-proof toys in American history | NPR
4. Argentina wins World Cup 2022: How much does each team bring home? | FoxBusiness

Melissa MinterJanuary 3, 2023General news, news, timely topics, Investing

Overview

The year began with the government stymied by a shutdown, and ended with articles of impeachment levied against the president. In between, both domestic and global economies showed signs of slowing, all while the trade war between the United States and China loomed throughout the year. Nevertheless, investors remained relatively bullish toward stocks, pushing several major indexes to record highs.

While domestic economic growth may have slowed in 2019 compared to 2018, it showed resilience and stamina. The third-quarter gross domestic product expanded at an annualized rate of 2.1% — moderately down from 2018's 3.0% rate, yet still strong enough to outpace global economic growth by a considerable margin. Consumer spending — which accounts for about two-thirds of the U.S. economy — surged, buoyed by a strong labor market, near-record unemployment, solid wage growth, and a burgeoning stock market. All told, the domestic economic expansion continued into its 11th straight year, the longest run in U.S. history.

Last year saw trade disputes between the United States and several of its trade partners reach an accord, but the trade war with China roared. The world's two largest economies engaged in a tit-for-tat skirmish, with each country volleying tariffs on their respective imports at the expense of the exporting nation. Coincidentally, a limited deal was announced just before the holiday shopping season, with the U.S. agreeing to forgo new tariffs and China assenting to allow more U.S. agricultural imports. Further negotiations are presumed, but the relationship between the economic giants remains tenuous at best.

Not only did the ongoing trade war affect global economies, but it also impacted domestic business investment, industrial production, and exports. Part of the justification cited by the Federal Reserve for lowering interest rates three times last year was weakness in business fixed investment and exports. As of November, new orders for durable goods were down 1.3% from the same period in 2018, and business (nonresidential) investment fell 2.3% in the third quarter.

The new year begins with a strong stock market and solid economic growth. The Secure Act, passed in late December, should change the retirement planning (and saving) landscape to some extent. However, the Treasury budget deficit for fiscal 2019 (October 2018-September 2019) exceeded $980 billion — 26% higher than the 2018 fiscal-year deficit. The trade war with China may cool with more mutual concessions, or accelerate, which would continue to dampen global economic growth. The new year will begin with the impeachment process and end with November's presidential election. What happens in between is anyone's guess. Will unemployment and inflation remain low? Will stocks continue to experience growth? Will oil and gas prices moderate or surge? Will the domestic economy continue to accelerate, or suffer a setback? Can the world economy recover, or will it continue to stagnate? If nothing else, 2020 looks to be an interesting year.

News

12/23 Market View Weekly: By The Numbers

Observations

Overview

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