The Profit Margin: January 9, 2023
Statistic of the Week
There is little debate that Americans have been spending down their “excess savings” accumulated during the pandemic. A recent study from JP Morgan found that excess savings in the country total approximately $900 billion; this figure is well below the $2.1 trillion-dollar peak set in early 2021. These funds will likely work their way out of savings accounts and into the general economy.
Global Perspective
The Japanese government is promoting financial incentives to attempt to get families to leave Tokyo and move to more suburban and rural areas. The government said that it would pay families with children 1 million yen ($7,660) per child should they leave Tokyo and move to an area of the country with a declining population. The goal is to spread its younger population more evenly across the country.
Market Moving Event
Monday: Inflation Expectations, Consumer Credit
Tuesday: NFIB Small Business Optimism
Thursday: Jobless Claims, CPI, Federal Budget
Friday: Import Prices, Consumer Sentiment
Commentary
While we should not read too much into one week’s performance, it was nice to start 2023 with positive performance from both the equity and fixed income markets. All three major US averages finished the week in the black. The DJIA and S&P 500 were up 1.46% and 1.45% respectively.1 The Nasdaq lagged but still gained 0.98%.2 And in the fixed income markets, yields fell causing prices to rise. The 10-year Treasury finished Friday with a yield of 3.57%, down 0.26% from the week prior.3
Equity markets were able to log positive weekly performance as a result of strong moves higher Friday. On Friday, the S&P 500 jumped 2.3% higher will the Nasdaq rose 2.6%.4 These increases were propelled by the Nonfarm Payrolls report for the month of December. The report illustrated several key points: the economy is still adding jobs, employees are coming back to the labor market, wage growth is softening while hours worked is expanding, and the unemployment rate dipped to 3.5% – matching a 50-year low.5 Strong hiring with less robust wage growth helps create the conditions for the Fed’s “soft landing” of the economy. However, one report does not make a trend. This week’s CPI reading on Thursday will be critical. It should be noted that several Federal Reserve governors, including Chair Powell, will be providing public remarks this week. Not to mention the start of earnings’ season… It is a busy week
Chart of the Week
Sources
Market EventsMoving :
MarketWatch.com
Chart of the Week: Clearnomics, Bureau of Labor Statistics, CNBC.com
Statistic of the Week:
Yahoo! Finance
Global Perspective:
Fortune Magazine
