Welcome to another issue of the Weekend Edition.
Thank you to all who’ve read and subscribed to the newsletter this week!
Here’s what we cover:
Market Recap - No Santa Rally, maybe…
Macro - 2022 in Charts
Premium Post of the Week - Inventory story
The Week Ahead - Economic & Earnings Calendar
Closing Thoughts - Goodbye 2022
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Let’s dive in ⬇️
Market Recap - Dec 19 - Dec 23, 2022
It was a tough week for the US Indices. Friday brought some reprieve but we still got an inside day so it’s a toss up on whether we see upside continuation into this week. The so-called Santa Rally may not be in the cards this year. The low levels of liquidity may just mean that we see a very muted close into the end of the year.
Commodities are starting to fare slightly better and with news of Russia reducing oil production, Brent oil has seen upward pressure on prices and so has WTI Crude.
China’s reopening is not going as planned at all and if anything, it seems to have brought on a new wave of disasters for the country, who are unable to cope with the 250million Covid cases in December alone.
In the US, PCE numbers came out on Friday.
On a year-over-year basis, the PCE Price Index was up 5.5%, versus 6.1% in October, and the core-PCE Price Index was up 4.7%, versus 5.0% in October. Definitely a welcome slowdown.
Personal income increased 0.4% month-over-month and personal spending increased 0.1%, as expected.
The personal savings rate as a percentage of disposable income increased to 2.4% from 2.2% in October, which remains close to an all-time low.
While overall, PCE and Core-PCE has declined, we’re still seeing services inflation remain relatively elevated, something that the Fed has talked about and discussed not wanting to see.
Macro of the Week - 2022 in Charts
Let’s look back at some of the most interesting charts for 2022
And finally… the Dow wins the best performance award for the year beating, at least until last Friday.
The Week Ahead
Earnings - Cal-Maine Foods (CALM) - Wed Dec 28, 2022 - After the Close
Closing Thoughts - Goodbye 2022
It’s been a tough year for the markets - stocks, bonds and commodities. And it continues to be a tough year for the world.
When I sit to write my closing thoughts, I usually have something to reflect on. As I sit and reflect on this year, I am at a loss for words. We’ve experienced one of the most difficult years in the markets and it’s hurt a lot of people. We’ve seen fraud, we’ve seen extreme levels of drawdown and we’ve seen people still inclined not to believe that the Fed is resolute in their stance.
The last few years brought in a great many novice investors, who rode the wave of easy money but didn’t position their sails when the tide turned. There were and still are to this day, people pumping stocks and other “investments” for their own benefit, leading the unsuspecting investor to ruin.
We’ve all been wrong this year at different times, and we will perhaps continue to be wrong. But, not learning from those mistakes is unacceptable. Following people blindly, is not a way to live. This is the best time to arm ourselves with education instead of trying to find the next “hot” trade. Because clearly, that doesn’t work.
I surmise that 2023 will be a challenging year as well as the Fed’s willingness to fight inflation remains steadfast. We need to brace ourselves for it and be ready to adapt when the tide does eventually turn again.
Here’s wishing you Happy New Year and safe investing in 2023.
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Ayesha Tariq, CFA
There’s always a story behind the numbers
Hi Ayesha, thanks for guiding us through the challenging market. Best wishes and Blessings in the New Year.