Expansion of the U.S. economy for the fourth quarter of last year and moderating inflationary pressures led the Fed to choose a less aggressive stance. Hence, the central bank hiked rates by 0.25 percentage points. This revived investor optimism. However, Fed Chair Jerome Powell has been clear about policymakers’ North Star: Getting inflation down to their 2% target. Signaling further rate hikes,…
Following last year’s abysmal performance, stocks have had an encouraging start to 2023, with the Nasdaq Composite and S&P 500 rising more than 10% and 6%, respectively, last month. Also, stocks rallied on better-than-expected fourth-quarter earnings and cooling inflationary pressures. Investors expect the Federal Reserve to issue smaller interest rate increases this year. Furthermore, Goldman Sachs experts anticipate a 35% risk…
The stock market ended 2022 as the worst year since the 2008 economic meltdown, with the Fed launching four consecutive 75-basis-point rate increases in 2022 before wrapping the year with a slightly lower 50-basis-point rate hike. However, the current market backdrop gives investors a golden opportunity to add quality stocks to their portfolios, trading at attractive valuations. Given the fundamental strength, these…
The stock market is yet to see an end to the Fed’s monetary tightening to control inflation. On top of that, recent economic data reflecting an economic and demographic decline in China is a stark reminder that the global economy, battered by various headwinds, may spiral into a full-blown recession. Hence, these precious metals ETFs could be ideal hedges against…
U.S. jobless claims, seen as a proxy for layoffs, fell by 19,000 to a seasonally adjusted 204,000 during the holiday week. While signaling rare labor market tightness, the recent data has also strengthened the case for the Federal Reserve to continue with its aggressive stance. Moreover, in the minutes of the Fed’s December meeting released yesterday, the Central Bank seemed to be…
Today I want to review the 5 key reasons to still be bearish in 2023. That starts by appreciating that the recessionary storm clouds are darkening over the first half of 2023. And if a recession is in the air, it creates this very negative vicious cycle: Recession > Job Loss > Lower Income > Lower Spending > Lower Corporate…
The recent bear market rally is not surprising. That is because stocks dropped as far as they should until there is greater proof of the pain that is to come in the economy. In particular, investors need to see more glaring weakness in two key areas before pressing lower: corporate earnings and employment. Well, here we are in the midst…
Over the weekend, I saw a news item that really stood out. That being an extensive CNBC survey showing that 45% of economists are predicting recession in next 12 months. On the surface, that news byte doesn’t sound too bad. Meaning it feels like it could go either way, which gives us some hope that all could be well. Now let me…
Every investor appreciates that recessions and bear markets go hand in hand. But the definition of a recession often seems more difficult to pin down. So are we in a recession? And if not, then does that mean that disaster has been averted or that the pain train is still rolling towards investors? This is an important debate because it…
Various macroeconomic and geopolitical concerns have roiled the stock market so far this year. Investors and analysts have been worried about a recession as the Federal Reserve maintains its aggressive stance to tame the surging inflation. The Federal Reserve meets today to hike the benchmark interest rates for the fourth time this year, and Street expects the central bank to…