Now that everyone has calmed down...
Now that everyone has calmed down...
What the Market? - Dec 13, 2021
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What the Market?
After coming down from his WebMD self-diagnosed panic attack, Mr. Market, consulted a real physician (and maybe a therapist…). He found out, he may just be okay after all, and perhaps he should wait on some more information. After a couple of volatile weeks, Mr. Market made up some lost ground after realizing that COVID’s new variant may not impact the economic recovery (or should we say, economic activity now?). This week, eye’s are once again on the Fed, analysts are looking to see how the Fed will respond to inflation hitting historical highs, and jobless claims hitting historical lows.
What’s driving the market?
What’re ya gonna do? The Fed’s upcoming FOMC meeting this Tuesday & Wednesday is expected to serve as the base for accelerated tapering of the asset purchasing program (which officially started its winddown last month). Some analysts are expecting the Fed to double its tapering pace. The Fed will also present its Summary of Economic projections that will outline economic conditions and interest rates over the next few years. Amid elevated inflation, a stronger-than-expected labor market and economic recovery, and a less problematic than expected COVID variant, analysts are hoping the Fed will shed light on any potential adjustments to monetary policy.
Something to note: The tightening labor market (which leads to employers needing to raise salaries to find or keep talent) may also further contribute to inflation. The Fed loves near-full employment, because duh, but it recognizes it may not be the best scenario to tame inflationary pressures.
What’s an investor to do?
Investor mindset
Keep doing what you’re doing. Nothing has changed, the media is shilling fear, officials foretold that the new COVID variant isn’t that bad, pharma companies insisted their vaccines were effective…go to sleep. It took a bit of time to get through to Mr. Market, but we’re here now.
Portfolio management
As the year finally comes to a close, these are your last windows of opportunity to do some tax magic harvesting losses (remember to avoid wash sale rules), but also may be a good time to buy into aggressive buying opportunities that sprung from the drop in the last few weeks. If you’re sitting on cash, take a look at your potential buy list and 2022 hypotheses and go on a holiday shopping spree.
Keep an eye on the economy
Retail Sales: Aside from the FOMC meeting, retail sales for November should be a great indicator to watch for how hot the topline for consumer discretionary spending is heading into the holiday season. Economists expect a 0.8% rise compared to October, but it would mean a slowdown vs the 1.7% increase in October.
Upcoming Earnings
Nothing noteworthy
Economic Calendar:
Monday: UK financial stability report
Tuesday: UK unemployment rate, Eurozone industrial production, US PPI and FOMC meeting
Wednesday: Chinese retail sales, UK CPI and PPI, US retail sales and FOMC Meeting and press conference
Thursday: European council meeting, Chinese FDI, Eurozone PMI, Bank of England and ECB monetary policy decision announcements, US Housing data, ECB press conference
Friday: Eurozone CPI, UK Consumer confidence
What we’re vibing:
Olivia Rodrigo’s Tiny Desk Concert. OK, don’t be too quick to judge. The control this woman has over her voice is unbelievable. For the haters out there, give it a try. There are some absolute bangers you probably didn’t know were hers. Also, it’s a DMV. Definitely not your typical NPR tiny desk.
Accepted on Netflix. For those needing a pick-me-up type of comedy or for those exhausted of Christmas movies but want the coming-of-age, not-thinking-too-much vibe, this may be a good pick for you. It’s about kids creating their own college after not getting accepted anywhere. It also features a very young Johan Hill in a weiner costume.
Resources
WTM Watchlist
A content guide to investing (books, books, books!)
Disclaimer
This writing is for informational purposes only and the author/s undertake/s no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. The author/s expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.