Jerome Powell decided to give investors an early Christmas gift. He gave a speech on Wednesday saying the Fed will likely pull back on the rate of interest rate hikes moving into the future. Investors heard that replied with "Say, Less!". They sent stocks rallying to close out November and start out December. While everyone spelled doom and gloom, the Stock Market had been going up since the end of September.
This is why we always say, "Time in the Market is better than Timing the Market." Doing nothing is much better than doing too much.
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🥳Stock Market Returns:
Tale of the Tape
Economy
President Biden called on Congress to force railroad workers to accept the labor deal that the white house brokered earlier this year.
💬In His Words: "As a proud pro-labor President, I am reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal."
My Takeaway: By forcing railroad workers to take this deal, it once again proves that big businesses can have horrible work practices and get away with it. Workers are not asking for more money, they want a better work-life balance. All they ask is for railroads to hire more workers to give workers the ability to take SICK days off. Over the last decade, the employee count for railroads is down 30% while share buybacks and dividends are up exponentially.
👮🏾♂️Cop Out: Biden said he is pushing for a federal paid leave policy. Biden is trying to save face as he makes a trash decision for hundreds of thousands of workers.
😐The Good-ish News: The House of Representatives blocked the strike by passing a resolution that passed handily, 290-137. Another resolution was passed that would require railroad companies to give at least 7 days of paid sick leave. The second resolution barely passed (221-207) in the House with only 3 votes from Republicans (you can see who actually cares about people). Unfortunately, the sick leave resolution did not pass in the Senate because Republicans. So the economy will continue chugging along, but railroad workers will continue bearing the brunt of it.
History Lesson: This is the first time Congress has had a say in private labor relations since 1992. Usually, the Federal government doesn't have a say in private labor but in 1926, The Railway Labor Act was passed. This allows Congress to block Railroad Strikes and help settle disputes between labor and employer. Rail is extremely important to the US economy. Two notes of how powerful railroad strikes can be:
Your 8hr workday is a result of a railroad strike
Labor Day Holiday is a result of a railroad strike
Last Wednesday, ADP released their private payroll numbers for November. This gives us an idea of how many jobs were added to the economy in November. This is seen as a preview for the main event which is the Nonfarm Payroll from the Bureau of Labor.
ADP reported 127,000 jobs added but 200,000 jobs were expected.
The Stock Market loved this news because remember right now, Bad news is good news and Good news is bad news. The hype lasted until Friday when the BLS Nonfarm Payroll was released. This gives a detailed picture of the labor market. It showed:
263,000 jobs were added in November vs an expected 200,000 jobs.
I still don't get why there is such a major difference between the ADP vs the Nonfarm, they are typically in lockstep but after the Pandemic, there has been a large divergence.
Takeaway: The Federal Reserve pays attention to the BLS number. This means the Stock Market also pays attention to the BLS numbers. Once the numbers were released, the Stock Market tanked to close out the week. Because it points to the Fed continuing to pump the brakes on the economy to force unemployment and slow down wage growth. The Fed is also looking at the low labor participation, 62%. By forcing life to be a bit more expensive with interest rate increases, the Fed is hoping to force people back into the Labor Marker.
My Takeaway: I disagree with the Fed on the need to increase unemployment and slow down hiring. Labor participation is low because a large part of our workforce retired during the pandemic. Also, the US currently has terrible immigration policies limiting the number of international workers that could fill the gap of retirees. However, I understand that the Fed can't let the market believe that it's done just yet. This could cause inflation to get worse so they would rather go too far than let up too soon. The question they seem not to be asking is which is worse: Having to pay more for stuff or Not having a job? I know the one I pick
Stats of the Week
The average amount U.S. consumer plans to spend on gifts this year
Ironically most people care more about the fact that you think of them than the actual gift.
With that being said here are some non-monetary gifts you can give this year that would probably carry more meaning:
Write a handwritten letter
Make something with your hands: arts and crafts are not just got kids
Cook them something
Create a music playlist
Make a digital album of special pictures of the year
🎄50,000
The number of lights on the Rockefeller Christmas Tree
It was lit on Wednesday
I just thought the number was cool
The most sold electronic device during the holiday shopping season has been the iPhone.
However, due to China's COVID lockdowns, there will be a 20 million iPhone shortfall
Might be a good thing for a ton of people's pockets
Amount Spent on Cyber Monday. This is an all-time record for Cyber Monday
Combined with the $9 billion spent on Black Friday, consumers spent $20 Billion in one weekend!!
This is the highest amount EVER spent on a holiday shopping weekend.
Aren't we supposed to be in a recession or something?!
Amazon announced that third-party sellers made $1 billion from the Holiday Shopping Weekend
It's the largest shopping weekend EVER for Amazon
Again The American Superpower is too strong.
Maybe the Fed is right and we need a recession
The average savings rate in the US as of November.
This is the lowest we have seen since 2005.
People are basically going from hand to mouth and spending every dollar they make.
Average amount that a household earning $200,000 plans to donate this year.
I like it even though most of it is to get tax deductions.
The average cost of a date is now 40% more expensive
I HATE BEING SINGLE
The average cost of gas currently
Gas is now lower than it was before Russia invaded Ukraine
Oil prices keep falling as China continues major Covid lockdowns helping the global economy
The number of viewers of the USA-England game two Fridays ago
This is the most-watched men's soccer match EVER in the US
Another 4.6 million viewers watched the game in Spanish. Bringing the total viewers to 20 million
The USA got bounced by the Netherlands on Saturday, which no real soccer fan was surprised by
Looking Ahead
Economy
Friday, the University of Michigan will release the preliminary December reading of its Consumer Sentiment Index (MCSI), providing a update on consumer confidence. You would think that as people continue to SPEND SPEND SPEND, people would be more happy about the state of the economy but that has not been the case at all. For the last entire year, Consumer Confidence has been on a steady decline. Hitting levels not seen since the 2008 Great Recession.
Why?: Inflation and higher interest rates have been a heavy toll on the budgets of everyone this year. But I believe a bigger culprit is the way we are consistently bombarded with negative news. Example although tech makes up 3% of theUS labor force, it has been the focus of the news as many tech firms have had massive layoffs.
Takeway: Consumer Spending makes up 67% of the US GDP, if we do not spend the economy contracts. Typically how we feel about the economy is a good indication of how we spend our money. But as you have seen throughout this newsletter, we are spending. So maybe the Consumer Sentiment Index is no longer a good indication of where the economy might be headed.
Sports I Love
🥅Messi coming to the USA
According to reports from the Time of London, Messi might be joining David Beckham's Inter Miami next year. Cesc Fàbregas and Luis Suárez may join him. However, the deal is still in the very early stages so it might not happen.
Knocked Out
This has been one of the craziest World Cups I've ever watched. Not because the games have had crazy goals. But because of the surprises from game to game:
Japan had a crazy comeback against Spain, which helped them advance and in the process knocked out Germany.
Belgium found a way to poop the bed against Croatia after losing to Morocco.
After getting smashed by France, Australia found a way to recover and knock out Denmark to go to the Round of 16.
South Korea out of nowhere beat Portugal to advance.
Ghana was in the driver's seat but completely flew off the rails. Uruguay also got bounced.
It's been so incredible to watch. I already know the craziness will continue into the Semis.
The Knock Out Stages began on Saturday with the first Round of 16 Games.
The USA got beat by the Netherlands no surprises but props to the US they played well in this tournament.
Argentina beat Australia but the Aussies made it interesting. Unfortunately, King Leo is King Leo and everyone bows to his greatness.
France beat Poland as expected
My Pick for the Final: Brazil vs France with Brazil taking home the throphy
Until Next Time Thanks for Rocking With ME
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
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