In a speech this week, Jerome Powell indicated that the Fed was looking to moderate rate hikes. This was the news investors have been waiting for since spring when the Fed began aggressively raising short-term rates. Chairman Powell stated the pace of hikes could slow as early as this month’s December meeting. Expectations are now set that the Fed will raise rates by .50% as opposed to the .75% rate hikes of recent months. Powell acknowledged that inflation in some areas has subsided and the full effects of the rapid Fed tightening are yet to be felt. But, he stated that labor conditions were still too tight and rates will remain high for some time to get inflation to the 2% annual target. As expected, stock markets reacted very positively to the news. Yahoo Finance Reuters
The Federal Reserve can start considering reducing steps to slow the economy because data is showing that happening:
Private Company Hiring Slowing: ADP reported private hiring slowed during November as companies added 127,000 jobs which were less than the expected 190,000 and sharply lower than the 239,000 reported in October. CNBC
Housing Prices Declined in September: Housing prices dropped 1.2% in September in the 20 largest U.S. cities. Prices are now down 3% from their peak in June. San Francisco and Seattle are down over 10% since the peak. Bloomberg CoreLogic
Coincidence Indicators Show Slowdown: Coincident Indicators involve data that are closely tied to very recent past or current economic conditions. Examples are employment and average weekly hours worked in manufacturing. October’s data shows the economy slowing down quite a bit in many states in just the past month. Definition - Investopedia Philadelphia Federal Reserve
Inverted Yield Curve: Yields on short-term bonds have fallen below long-term bonds. This is known as an inverted yield curve which has been a reliable predictor of recessions. But the pandemic and the government's fiscal and monetary response have warped data and created statistical anomalies, including a negative GDP number earlier this year. Since it has been such a reliable indicator and the economy is slowing down, it behooves investors to warrant caution that a recession could occur in the near future. WSJ Axios
Investment Strategy Corner:
Dollar Cost Averaging: With markets so volatile this year, many investors are hesitant to invest large sums of cash. One strategy that is helpful in these situations is dollar-cost averaging (DCA). It is the practice of investing the same amount of cash each month or quarter over a period of time. By using this strategy of constant dollar purchases with stocks, the investor is buying fewer shares when the prices are higher, and more shares when prices are lower. The same methodology works for bonds or other investments too. DCA is a way to get invested in the markets without jumping in all at once. And it can be used at any time and not just in volatile markets. Feel free to reach out to your advisor if you want to discuss DCA or any other strategies for investing. Investopedia Wikipedia
Quick Hits for the Week:
- Stay on a healthy track – tips for healthy habits during the holiday season: VeryWellFit
- Longevity strategies for the rich - an exclusive conference for the ultra-rich who want to extend their lives past 100: MIT Technology Review
- Things I didn’t know – the ancient city and archaeological site of Afragola, discovered in 2005, was buried by a Vesuvius eruption 2000 years before Pompeii: GoodNewsNetwork Discover
- Searching for dogs’ intelligence, a scientist concluded their true gift is affection: GetPocket
- The best and most interesting electric cars coming out in 2023: MyDriveCar CNET
Should it be Called Football or Soccer? U.S. Advances in the World Cup: After a thrilling win against Iran on Tuesday, the U.S. enters the knockout round of 16 teams (win or go home). The next game is against a very good Netherlands team at 10:00 AM on Saturday. The U.S. is known more for domestic sports of baseball, football, and basketball but it has gained respectability in the world’s most popular sport as the U.S. has advanced to the knockout stage in 4 of the last 6 World Cups. I enjoy the matches but also enjoy seeing the world come together to celebrate sports, much like the Olympics. BTW, the next tournament is in 2026 and will be co-hosted by the U.S., Canada, and Mexico, and Boston will host some matches. ESPN FIFA 2022 FIFA 2026 Host Cities
Stiffness in Your Hip or Knee? Simple Stretches For Your IT Band: The Iliotibial (IT) band is a long piece of connective tissue running along the outside of your leg from the hip to the knee and shinbone. The IT band can become tight or irritated from repetitive use like running and cycling, weak hip or abdominal muscles, walking/running on a track or uphill, or even excessive sitting (watch out financial advisors!). Recently, my IT band seemed tight. Scroll down the linked article for the stretches which I found helpful in loosening mine up. Healthline
Fun Holiday Quote and Video to Get You in the Mood: “I think I saw it in the script and thought I’ll hate doing that. No Englishman can dance when they’re sober at 8 am in the morning.” Hugh Grant in an interview discussing his iconic dance scene at 10 Downing Street in the holiday movie, Love Actually. Bloomberg And now YOU HAVE TO WATCH THE DANCE! YouTube 😊
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