The Markets
What will it take to slow this economy down?
In 2001, railway workers slowed a runaway train in Ohio by latching a second engine to the back of the locomotive and applying the brakes. In all, the train traveled sixty-six miles over two hours, decelerating from a maximum speed of 47 miles per hour to 10 miles per hour before workers regained control of it, according to CNN.
Throughout 2022, the United States Federal Reserve has been trying to slow inflation by putting the brakes on the U.S. economy. So far, the Fed has raised rates six times, but the economy continues to grow apace. Last week, the Bureau of Economic Analysis reported the economy grew faster than originally thought from July through September 2022. Gross domestic product (GDP), which is the value of all goods and services produced by the U.S., was up 2.9 percent, annualized, rather than 2.6 percent as the advance estimate indicated.
Last week’s unemployment report also suggested the economy remains strong. More jobs were added than economists expected, and the unemployment rate remained at 3.7 percent. Average hourly earnings also increased faster than expected, up 5.1 percent over the last 12 months.
Megan Cassella of Barron’s reported, “The biggest outstanding obstacle to the Federal Reserve’s success in reining in inflation boils down to a numbers problem: There aren’t enough workers in the [United States]. Simply put, labor supply and demand need to come back into balance to contain wage growth and services inflation, which continues to climb… A combination of factors is contributing to the dearth of workers, from Baby Boomer retirements and falling immigration to a low birth rate and long COVID. Together, they suggest that shortages are here to stay.”
Last week, stock and bond markets rallied following Fed Chair Jerome Powell’s mid-week speech, in which he confirmed it was likely December’s rate increase would be smaller than the last few increases have been. Later in the week, the strong employment report checked investors’ enthusiasm. Regardless, major U.S. indices finished higher, reported Nicholas Jasinski of Barron’s, and Treasury yields finished the week mostly lower.
| Data as of 12/2/22 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
|---|---|---|---|---|---|---|
| Standard & Poor's 500 Index | 1.1% | -14.6% | -11.0% | 9.4% | 9.1% | 11.2% |
| Dow Jones Global ex-U.S. Index | 1.3 | -17.0 | -14.7 | 0.0 | -0.6 | 2.2 |
| 10-year Treasury Note (yield only) | 3.5 | N/A | 1.5 | 1.8 | 2.4 | 1.6 |
| Gold (per ounce) | 1.9 | -1.9 | 1.1 | 6.9 | 7.0 | 0.4 |
| Bloomberg Commodity Index | -0.4 | 15.4 | 20.3 | 14.1 | 6.0 | -2.2 |
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, 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.
Can You Believe It’s December Already?
According to Andy Williams, Garth Brooks and Kylie Minogue, “It’s the Most Wonderful Time of the Year.” During December, holiday enthusiasts don ugly sweaters, wheedle recipes out of relatives, light a wealth of candles, and celebrate a diversity of holidays. See what you know about this magical time of the year by taking our brief quiz, below.
If you have any questions about tax or financial strategies you might take advantage of before the end of the year, give us a call at (203) 967‑2231 to schedule an appointment with your advisor.
- Which of the following holidays is NOT celebrated in December?
- International Ninja Day
- Sacher-Torte Day
- Dewey-Decimal System Day
- National Take Down the Christmas Tree Day
- Scientists have studied the psychology of gift giving. They find that the most valued presents are:
- Expensive gifts that make others envious
- Beautifully wrapped gifts that are pleasing to the eye
- Sentimental gifts that bring joy and happiness
- Thoughtful gifts that reflect the recipient’s hobbies and interests
- Which generation is expected to spend the most ($1,823) on gifts, travel and entertainment this holiday season?
- Gen Z (Ages 9 to 24)
- Millennials (Ages 25 to 40)
- Gen X (Ages 41 to 56)
- Boomers (Ages 57 to 75)
- When did the New Year’s Eve ball drop first take place in Times Square? (Hint: Teddy Roosevelt was President.)
- 1893
- 1907
- 1920
- 1945
Answers: 1) d; 2) c; 3) b; 4) b
Weekly Focus – Think About It
“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend.”
—Melody Beattie, author
Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
- 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. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- 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.
- 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.
- You cannot invest directly in an index.
- Stock investing involves risk including loss of principal.
- The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
- The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
- These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
- This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
- The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
- Consult your financial professional before making any investment decision.
Sources:
https://www.cnn.com/2001/US/05/15/runaway.train.05/
https://www.bls.gov/news.release/empsit.nr0.htm (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/12-05-22_Barrons_Why%20the%20Fed%20Must%20Cause%20More%20Pain%20to%20the%20Job%20Market_4.pdf)
https://www.barrons.com/articles/fed-interest-rate-hike-inflation-wage-growth-job-market-51670025045 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/12-05-22_Barrons_Stocks%20Rise%20on%20Cooling%20Inflation%20and%20Fed%20Moderation_5.pdf)
https://en.wikipedia.org/wiki/It%27s_the_Most_Wonderful_Time_of_the_Year
https://www.brainyquote.com/authors/melody-beattie-quotes
https://nationaltoday.com/january-holidays/#jan-6
https://www.sciencedirect.com/science/article/abs/pii/S105774081730044X
https://www.pwc.com/us/en/industries/consumer-markets/library/2022-holiday-outlook-trends.html
https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/
https://timessquareball.net/ball-history/
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
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