In Honor of the Christmas and New Year's festivities, there will be no Market Update on Monday the 26th and January 2nd. However, there will be a Money Mentality Newsletter on Wednesday the 28th and January 4th on preparing for 2023 Financially. It shall be short this I promise!
Enjoy your family and friends, watch lots of movies and eat plenty of food. Be lazy if you do not have work. Then take some time to think about all you have been through in 2022 and what you will accomplish in 2023.
This newsletter is mins and words
😬Stock Market Returns:
Tale of the Tape
Economy
😤Inflation Peaked and is Receding
C.P.I. (Consumer Price Index) aka Inflation, numbers for the month of November were released on Tuesday and they made investors very happy.
Year Over Year CPI was 7.1% vs expected 7.3%
Month Over Month inflation rose 0.1% vs expected 0.3%
Year Over Year Core Inflation which excludes food and energy prices was 6% vs expected 6.1%
Month Over Month Core Inflation rose 0.2% vs expected 0.3%
Big Picture: This is the lowest rate of inflation since November 2021. So technically the Fed was right about inflation being transitory. Inflation cooling takes the pressure off the Fed to continue raising interest rates (or so I thought), which means the Fed might have just pulled off a soft landing for the economy. Killing inflation without causing a recession.
BUT: Food prices, which is how we all feel the effects of inflation the most, keep rising. Grocery prices were up 0.5% in November after being up 0.4% in October.
Egg prices are up 49% in the last year 😢
Chicken prices are up 12%
Milk prices are up 15%
My Takeaway: Although general inflation is coming down, there are still segments of inflation that keep rising for various reasons. Although the Fed might stop its war path of destroying inflation by raising rates. It doesn't mean that inflation on some of the core items we buy every day are going down because there are multiple factors that impact inflation. A reality that most people choose to ignore including the Fed, sometimes.
On Wednesday, Jerome Powell did exactly as expected and announce an interest rate hike of 0.5%. Bringing the Fed funds rates to 4.5%. The Stock Market (as I predicted last week), reacted by falling 3% immediately after the speech.
WHY?: Jerome Powell in his speech once again reminded investors that 7% inflation is nowhere near the target of 2% annual inflation. Powell said they would be keeping rates much higher through the end of 2023 before deciding to bring rates down. Jerome also said he expects unemployment to climb to 4.6% in 2023 from the 3.7% we currently have.
💬In His Words: “We will stay the course until the job is done. Worse pain would come from a failure to raise rates high enough and from us allowing inflation to become entrenched in the economy,” Powell said during a press conference on Wednesday.
My Takeaway: Investors overreact to everything. If there is one thing I have learned over the last year is that even the Fed does not know what it will do in the next two months. Holding on to their expectations for the next year is a waste of time.
Late last year, Powell expected to not have to raise rates as much or as quickly as they had to this year but then Ukraine happened. Who knows what will happen in 2023 that will force their hand to make a major change to policy? As always, it is okay to keep up with the information but never make decisions based on it. Always play the long game.
According to data from Alignable, the number of small businesses that laid off employees doubled in December. Plus 41% of Small businesses are struggling to make rent payments. Another 74% of businesses have instituted hiring freezes to manage costs. This is really bad because this comes during the holiday season when sales are supposed to be at their strongest.
Big Picture: Small businesses make up 44% of economic activity in the US. Small businesses hire the highest number of people. This can be shocking to realize when we mostly are focused on giant companies around the country.
Small businesses like consumers are facing the brunt of the policies from the Fed, as they shifted from too loose to too tight. Carol Ruth, a small business advocate said:
Labor issues, supply chain issues and inflation [have] made it nearly impossible for small businesses to thrive. We are seeing reports of both increased layoffs and hiring freezes as small businesses try to do whatever they can to survive, knowing also that changing consumer spending habits and likely tighter economic conditions are imminent.
What's Next: Congress is set to modernize the SBA, Small Business Administration, which is designed to support small businesses in times of trouble. The update to the system should enable the government to better assist small businesses in the way it supports larger organizations.
Takeaway: The Recession we have feared seems to be here. Or at least small business leaders are acting under the assumption that it is. Even with the crazy spending from consumers leading into the holiday season, it seems none of that matters. Recessions tend to start with the mind more than in reality. When people feel a way, they express the way they feel with their dollars. People are beginning to express their feelings. As always take this as another warning sign of what might be coming. Hope that Emergency Fund is in place.
Stats of the Week
Not a Stat but a new tax form that you might get next year because our government SUCKS at making taxes easy.
The 1099-K was for small business owners who had more than 200 transactions totaling more than $20,000
However, as part of the American Rescue Plan, someone thought it was a good idea to begin tracking every single expense over $600 made using services like Venmo or CashApp, or PayPal.
😵WHAT?: IRS says they are not trying to complicate things but when have they ever been clear about ANYTHING?!!
They say this is to capture taxes on the wealthy that go unpaid
I don't know how tracking $600 payments will make up for the variety of tax loopholes that we refuse to close
Takeaway: Just be careful when you are filing your taxes in the new year.
Check all your accounts and digital payment services so you do not miss anything and get hit with a penalty.
A coalition of companies is pushing to get this provision changed and increase the threshold from $600 to $5,000
Starting price of the Ford F-150 Lightning
When it was initially unveiled in May 2021, the starting price was to be $39,974.
Due to rising material costs, the price has continued to increase
This is the Electric Vehicle I wanted but seems that I am not buying one for a LONG TIME
Looking Ahead
This is all I care about.
Enjoy your time off if you have some.
Love on your family and friends.
Sports I LOVE
😭World Cup is OVER
With a heavy heart, I bare the sad news that the World Cup is over.
Now I have to wait another 1267 Days until it returns in 2026. The good news is it will be in the US and ATL will be hosting games. So I am excited about that.
Let’s do a quick recap of the Semifinals:
King Leo and his Albicelestes knights continued their march toward World Domination
Argentina made light work of Croatia completely dominating the game and winning 3-0
Messi did so many Messi things that he is now without a doubt the undisputed Greatest of All Time
France played the Evil Step Mother to Morocco's Cinderella Story
The game was great but France was not gonna let Morocco stop their chances at being one of the few teams in history to repeat as World Champions
This French team is Overpowered literally they have had so many injuries to star players and yet it does not seem to phase them at all.
The FINALS: King Leo vs The French Men
This was without a doubt the greatest World Cup Final of the modern football era:
King Leo started the game off with a goal then his Lancelot, Angel Di Maria, scored. Everyone thought the game was over
Didier DeChamp is gonna go down as one of the greatest tacticians in World Cup history
At half-time, he completely changed the way France played
In the second half, Mbappe came alive.
In the span of 3 mins, he scored 2 goals to tie the game up and force extra time
In extra time, Messi did Messi things but Mbappe did Mbappe things
It went into penalties and Argentina came out on top
This game was so GOOD! Messi and Mbappe showed up and SHOWED OUT!!
In the end, Messi walked away with the Crown
Extras
Artemis I, the spacecraft that was launched to the moon about a month ago. Splash landed in the Pacific Ocean on Sunday. It was the first successful space flight to the moon and back in over 50 years. Proving that we might be able to set foot again on the moon in the near future
NASA is hoping to launch Artemis II with humans on board in 2024
In 2025, NASA wants to land humans on Moon with Artemis III
We might have finally cracked the code to generate all the energy we may ever need. On Tuesday, the Department of Energy announced that Nuclear physicists at a California lab have finally created a Fusion Nuclear reactor (not to be confused with fission which is the one we currently have) that produces more energy than it uses. An example of a Fusion Reactor is the Sun that powers everything on Earth.
The beauty of Fusion is it creates a ton of energy without producing the nuclear waste of Fission
Fusion Energy also has the ability to create unlimited power
think Ironman Suit and Avengers Tower
"It remains unclear whether this research will lead to a viable future power source," Nigel Woolsey, a professor of physics at the University of York who wasn't involved in the research
Big Picture: More money will be invested in this space. According to Axios, There are more than 40 private fusion companies globally, which have raised over $2.5 billion in investment to date. Some scientists claim they will be able to deliver fusion energy technology within a decade. Others say it will be another 50 years
TL;DR: The Future is coming faster than we think