Happy Wednesday!
I hope you are well. As we near the end of the year (can you believe it?) - Iāve been thinking of some goals and new habits Iād want to form in 2023. In the past Iāve always picked 5-10 new things I want to pursue in the New Year, knowing that even if I just stuck to one new thing - it would be a success. This year, however, I think Iām going to narrow my list down to 1 or 2 new habits Iād like to build and stick with them for at least 30 days.
Hereās my personal list:
Read 20 minutes per day
Cardio twice a week
1 Date Per Week (lol)
Drink 100 oz of water per day
Golf once a week
Analyze the financials of 2 stocks per week
Which one of these should I try to stick to for at least 30 days? Let me know by replying directly to this email, and let me know if you have any fun habits you want to start.
I donāt like setting full-year goals. Often times you wonāt even build the habit because the overarching goal is too grand. Instead, a 30-day goal of āXYZā where XYZ is your new habit could be a great place to start.
Enjoy this weekās Hump Days!
- Humphrey, Rickie & Tim
Featured Story
The Labor Department issued its jobs report on Friday and the payroll numbers came in well above the original estimate at 263k (est. 200k). Since the report, the market has been in decline but why is that? Why would beating expectations in job growth result in a decline in the market? We examine further this week.
The Federal Reserve has been working hard to bring down the current 40-year high inflation levels we currently see. The Fed has taken the strategy of moving the needle that is the federal funds rate in small increments to bring the benchmark rate to its target of 3.75% - 4%. As they do this, they (along with all market participants), watch closely the data that gets published surrounding the economy and evaluate whether the rate hikes are achieving their intended outcome. In this case, the intended outcome is to see a slowing down of the economy.
However, in the last few months, we have seen data come back better than expected - particularly in the job market which is why many people who have their hands on the levers of monetary policy refuse to say that we have entered into a recession.
Not only did the jobs report come back beating estimates on a nonfarm payroll benchmark but average hourly earnings jumped 0.6% for the month which was double the Dow Jones estimate. Wages were also up 5.1% YoY, well above the 4.6% expectation.
On Friday, the Dow Jones Industrial Average fell as much as 350 points following the report on worries that the data could make the Fed even more aggressive. Fitch Ratings chief economist Brian Coulton was quoted saying:
āThe Fed is tightening monetary policy but somebody forgot to tell the labor market. Job expansion as this speed will do nothing to ease the labor supply-demand imbalance that is worrying the Fed.ā
In short, after a series of consecutive rate hikes, the Fed has not done enough to signal to investors that they have effectively reigned in the economy and many are worried about more aggressive action. Seema Shah, chief global strategist at Principal Asset Management suggested that to have added 263k jobs even after rates have been raised by 375 basis points is no joke. The labor market is piping hot and this will continue to heap pressure on the Fed to continue raising policy rates.
Weekly News Roundup
Payrolls and Wages Blow Past Expectations, Flying in the Face of Rate Hikes (CNBC)
Job growth came in higher than expected in November despite the Fedās efforts to slow the labor market and tackle inflation. Nonfarm payrolls increased 263k while the unemployment rate sat at 3.7%. The monthly gain was a slight decrease from Octoberās figure of 284k, although estimates came in at an increase of 200k. The slight decline likely has little effect in slowing down the Fedās interest rate hikes towards their target range of 3.75% - 4%.
HY: Job market too hot still - rates will rise. Be prepared for some pain in the markets IMO. Watch my videos to prepare.
Microsoft Mulls Building āSuper Appā (Reuters)
Microsoft is considering building a āsuper appā that could include shopping, messaging, news, and web search services among others. The aim is to loosen the hold that Google and Apple have on the mobile search space as well as boost its own advertising business, Bing search, and Teams messaging. Popularized in Asia by Tencentās WeChat, Elon Musk has shown interest in building a super app that would combine a multitude of services.
HY: Sounds like a good idea at the start, quickly becomes an antitrust issue if successful (China doesnāt seem to have that problem).
TSMC Raises Arizona Chip Investment to $40B as Biden Visits (WSJ)
President Bid visited a Taiwan Semiconductor Manufacturing Co. (TSMC) site on Tuesday in Arizona, where the company plans to build a second factory and increase its investment to $40B. The investment follows the passage of a law earlier this year designed to boost U.S. semiconductor production. The second factory will make chips with 3-nanometer technology, equal to the tiniest and fastest chips available today.
HY: Apple wants to use the factory in Arizona to start sourcing chips from there instead of having increased China exposure risk.
Charts of the Week
Despite rate hikes and fears of an imminent recession, consumers are actually doing okay. This probably means that the Fed can hike rates for longer before consumers truly start feeling the pain of higher rates.
I'm a morning person and value my morning walks. Even though I lost my furry cardio buddy, the walks remain because they are a great way to clear out the cobwebs and enjoy nature. I will often listen to a podcast that lasts at least 30 minutes so that I can track my time and distance. I have a Gazelle for when the weather is just too nasty to go out.