What to expect in the Stock Market (December to 13 to 17)
The most important thing to discuss today is
MY LITTLE BROTHER’S BIRTHDAY IS THIS THURSDAY.
If you are on Twitter, go spam him and wish him a Happy Birthday!
Love that Bro!
Now Down to Business
Last week as expected was a bumpy week for the markets. There were wild swings in both the positive and negative directions. However, at the end of the week, the markets finished strong (S&P 500 hit new All-Time High) despite some negative economic news, more on this below.
Tale of The Tape
We got the Consumer Price Index aka Inflation numbers on Friday. If there was one emoji that describes the direction of inflation it would be 🚀. It increased to a 39 year high of 6.8%.
The biggest contributors to the continued increases in prices are:
Energy Prices (oil mainly) which is up 33% from a year ago,
Used Cars prices (basically cost the same as new cars) up 31%
Food price up 6% from a year ago.
Demand continues to surge back and the world ignores every variant of Covid, prices of goods continue to rise. Unfortunately, the supply chain is still the supply chain meaning goods are still not moving freely. Which is playing a key role in the continued rise in inflation. We will be hearing from the Fed this week as they will be hosting their monthly FOMC meeting on the 14th and 15th. I expect the Fed to announce an increase to the pace of tapering and possibly announce interest rate increases starting middle of next year. Meaning your boy needs to buy this house FAST and lock in some of these all-time low mortgage rates.
Side note on Inflation Discussions
Most of the discussions I have seen surrounding inflation have been half-truths. Most people who talk about inflation basically say the same thing. Along the lines “Because the Federal Reserve and the Federal Government pumped and printed so much money last year, this is why we have the crazy inflation we have.” Usually, it ends with a conclusion of how dumb the Fed was to believe inflation could possibly be transitory.
Most people never discuss what happened last year and why there was a need to pump that amount of money into the economy. Most people have forgotten that we were in the midst of a pandemic where the economy was COMPLETELY SHUT DOWN. Where people could not work or spend as normal. Meaning there was no flow of money AT ALL. The Federal Government and the Federal Reserve had two options before them both terrible but one more terrible than the other:
Do nothing and allow the economy to go into a DEPRESSION. Not a recession a DEPRESSION. And hope that after the pandemic, we might be able to pick up the pieces of the economy and Humpty Dumpty our way back.
Flood the markets with liquidity as much and as fast as possible, to ensure that people can eat and survive the temporary period. The downside to this option: Higher inflation than normal which can be dealt with on the back end.
If you were the Federal Government or the Federal Reserve, which option are you going to go with?
Now there is an argument to be made that the Fed went too long with their QE (buying securities) throughout this year but we ignore the other mandate of the Fed which is FULL EMPLOYMENT. We are finally at a point in the economy where we can say we are essentially back at full employment. Where anyone who wants a job can generally get a job. (There is an argument to be made that there is a skills mismatch in the economy but that is another subject for another day).
Because of the actions of the Fed and The Federal Government, wages are finally picking up. No not for middle-class individuals but for low-income workers who for the first time in 20 years are seeing their wages go in the positive direction.
SO again I ask “What would you do?” I would have preferred that we were already done with tapering (cause then maybe house prices would not be so high, personal problems) at this time of the year but I can also understand why the Fed chose to keep their foot on the accelerator for a while longer. I just want more people to see the full picture rather than the one-sided narratives that people are always painting.
To show the renewed strength of the labor market, it seems Unions are making a comeback? Starbucks had a vote at three stores in Buffalo on unionization of the stores.
Two of the stores voted YES to unionize. This is the first-ever union of any Starbucks store and a huge deal for the foodservice industry. Less than 2% of the workers in the food industry belong to a union as of 2020. But with a large retailer like Starbucks having a union, this could send waves throughout the country. Already after this vote, 3 more Starbucks stores in Buffalo and 1 in Arizona have filed petitions to vote for a union. As the Labor Market remains strong, I expect more of these kinds of votes in a variety of industries. Amazon is facing unionizing efforts in Bessemer, Alabama, and will be re-voting on unionization soon.
My Favorite Economic Indicator Released
As I predicted last week,
People are feeling a bit better about the economy. The Holidays tend to have that effect on people. However, it is still miles lower than this same time last year.
But on another positive note, Consumer expectations are also moving in a positive direction. I will take that as a win for the economy and for the Magic of Christmas!
Looking Ahead
I mentioned it earlier but the biggest things happening this week are:
My brother’s birthday
My last week of work for the year
And I guess the Federal Reserve’s FOMC meeting is pretty important as well
As far as Earnings are concerned, I am
But even though I am not excited about any company this week. One to watch is FedEx, as they will be reporting earnings for Q4 and not Q3.
FedEx is seen as a preview company, meaning they give us insight into how other companies’ earnings might look in the Upcoming Quarter.
Totally Unnecessary Man U Update
They tied against Young Boys in the Champions League on Wednesday. I will give a pass for this game because Man U basically played their reserves and rested the starters. They should still have won because it’s freaking Young Boys, I mean do any of y’all even know who “Young Boys” is? Like seriously what kind of a Football team name is “Young Boys”?
Then on Saturday, we beat Norwich City. But we SUCKED the entire game. Literally David de Gea turned into freaking Superman and saved the team. How are we barely beating the team at the Bottom of the Table! Ragnick has his work cut out for him
Thank you for reading
I hope you all have A WONDERFUL week. I will see you back here on Wednesday for another post. In the meantime, Go subscribe to Rambling Mind Podcast for mid-week stock market updates. You can also catch me on TikTok, Instagram, and YouTube every day.
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Remember GENEROSITY > greed
God bless Each and Everyone of y’all
MERRY CHRISTMAS!
✌🏾
-Kelechi