Dogwood Wealth Management | Weekly Newsletter (Week Ending 1/6/22)

Week In Review

Economy

On Wednesday, the minutes from the Fed's December meeting were released. None of the 19 Fed officials believe it will be appropriate to cut rates in 2023, and seventeen of them believe rates will rise above 5% this year. Furthermore, seven officials believe rates should rise above 5.25%. The Fed and the bond market are clearly not seeing things the same, as the CME Group's Fed Watch Tool is presently showing less than a 10% probability of rates rising above 5.25%.

Friday's jobs report showed the strength of the labor market continues to fly in the face of the Fed as the economy added 223,000 jobs, more than expected by Wall Street. The unemployment rate ticked down to 3.5%, matching the pre-pandemic low previously not seen since the early 1950's. With inflation heading in the right direction since the back half of 2022 and the labor market holding strong, the prospects of an economic soft landing aren't completely dead yet.

Markets

The US stock market got off to a bumpy start on a short week, but finished on a strong note, reacting to the positive jobs data on Friday. For the week, the S&P 500 finished up 1.45%. It may be completely arbitrary and meaningless, but at least for now, we can say that the stock market is positive for the year (yay!).

This week we're coming up on earnings season for US stocks. The party gets started in earnest on Friday, January 13, when some of the major US banks will report on their Q4 earnings. The consensus opinion on Wall Street is we will see S&P earnings declining to start the new year, which is the source of fears for many of a recession in 2023.

What We're Reading

• To Invest for Retirement, Build Friendships and Hobbies - WSJ
• Ten Words for 2023 - HumbleDollar