The Profit Margin: January 3, 2022
Statistic of the Week
Eight states are raising their minimum wage rates for 2022 as they march towards $15/hour. The states doing so are predominately located in the Northeast. Some other states not included in these eight have annual minimum wage hikes tied to inflation rates.
Global Perspective
China is signaling more accommodative monetary policy. The central bank cut interest rates for the first time since the start of the pandemic. While a minor cut, the move is indicative of a change of posture. Other central banks across the globe are tightening policy.
Market Moving Events
Monday: Construction Spending Tuesday: ISM Manufacturing Wednesday: FOMC Meeting Minutes Thursday: Jobless Claims, Trade Deficit, Factory Orders, ISM Services Friday: Nonfarm Payrolls, Unemployment Rate, Consumer Credit
Commentary
In the last week of 2021, domestic equity markets finished on a strong note. There was relatively little economic data and trading volumes were thin, as expected. All three major equity indices finished the week in the black with the DJIA leading the pack. The Dow rallied 1.24%.1 The S&P 500 rose 1.12%.2 And the Nasdaq brought up the rear, increasing 0.56%.3 With the strength in the equity markets, fixed income yields rose. The yield on the 10-year Treasury rose 0.03% to finish Friday at 1.51%.4 The conclusion of 2021 and start of 2022 sets the stage for predictions and prognostication. We’ll do our best to avoid that game, and instead focus on consumer sentiment. In recent months, consumer sentiment has been on the decline – this could be linked to the surge in Covid cases due to omicron. (We would be remiss if we didn’t note that the year ended with record cases reported).5 Since 1997, there have been 12 years where consumer confidence was declining into year-end; the S&P 500 notched positive returns in the year following in seven instances.6 The same can be said for investor bullishness – also on the decline despite the markets trading at or near record highs.7 All this while retail sales from November 1 through Christmas Eve were up 8.5% year over year, the highest in the past 17 years8… Crosswinds abound. Caution is warranted as we enter the New Year. – Dan McElwee, CFP, ® MBA
Chart of the Week
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Sources
Statistic of the Week:
NPR.com
Global Perspective:
CNN.com
Market Moving Events:
MarketWatch.com
Chart of the Week:
Haver, Clearnomics, Department of Labor
Commentary:1.Bloomberg2.Bloomberg3.Bloomberg4.Bloomberg5. Barron’s6. Barron’s7. Barron’s8. Barron’s