Stocks managed to gain ground last week as investors turned their focus to corporate earnings. The Standard & Poor’s 500 gained 1.55%, while the Dow Jones Industrial Average rose 1.05% . The Nasdaq Composite index picked up 2.38% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.73%.1,2,3 Year-to-date the EAFE index is down 3.18%, which is better than any of the major US indexes. Other countries did less to stimulate consumption and may experience less inflation that the US. On the other hand, the possibility of war in Ukraine makes it impossible for me to recommend increasing your allocation to foreign markets now. |
©2020 YCharts, Inc. All Rights Reserved. YCharts, Inc. (“YCharts”) is not registered with the U.S. Securities and Exchange Commission (or with the securities regulatory authority or body of any state or any other jurisdiction) as an investment adviser, broker-dealer or in any other capacity, and does not purport to provide investment advice or make investment recommendations. This report has been generated through application of the analytical tools and data provided through ycharts.com and is intended solely to assist you or your investment or other adviser(s) in conducting investment research. You should not construe this report as an offer to buy or sell, as a solicitation of an offer to buy or sell, or as a recommendation to buy, sell, hold or trade, any security or other financial instrument. For further information regarding your use of this report, please go to: ycharts.com/about/disclosure Above I'm showing the 11 sectors that make up the S&P 500 broken out for all of 2021 and then for 2022 so far. As you can see, energy has remained the best performer. That was not expected by me, but I believe that what we are seeing now is a massive stockpiling to prepare for the possibility of War in Ukraine. Meanwhile Real Estate has fallen from a top-performer to a cellar dweller. With interest rates on the rise this year it will be very difficult to make money in that sector. Financials and Consumer Defensive companies are the place to be in this environment as rising rates are good for many banks and gradual declines in consumer spending can be absorbed better by "defensive" companies that sell essentials of living that people can't stop buying even when the price goes up (think General Mills, Proctor & Gamble, Coca-Cola for example.) |
Earnings in FocusAt the start of the week, stocks extended the previous week’s rally with some high-growth companies leading the move higher. Strong company profits fueled the market the middle of the week, until an earnings disappointment from mega-cap Meta (parent company of Facebook) took investors by surprise. The earnings miss deflated sentiment as it heightened worries of what it may portend for other technology companies yet to report. These anxieties led to a sell-off that reverberated across the market. Subsequent earnings beats from several technology and social media names, and an well above-consensus rise in new payrolls on Friday, helped the market close with week with a solid gain. My TakeWe will likely continue this see-saw for some time with stocks gaining during earnings season and getting punished when the focus shifts back to Fed actions/rising rates, COVID, the Ukraine situation, or some new issue. My overall feeling is that the risks outweigh the positives and I expect both stocks and bonds to be negative in the short-run. Just remember that I am not in the prediction business, and you shouldn't be either. If you are working and contributing to your retirement accounts then every decline is an opportunity to lower your costs. We need to get ready to rebalance when interest rates are at or just past their peak and the market cycle starts all over again. Omicron and UnemploymentA string of employment reports pointed to a generally healthy labor market, despite the Omicron surge late last year. The Job Openings and Turnover Survey (JOLTS) showed a hiring slowdown, with near-record high job openings and worker resignations. The ADP (Automated Data Processing) employment report saw private payrolls shrink by 301,000. That was the first monthly decline since December 2020.4,5 More encouragingly, initial jobless claims declined, while continuing jobless claims reached their lowest level since 1973. A strong January employment report showed 467,000 jobs added during the month, with upward revisions to previously released November and December.6,7 This Week: Key Economic DataThursday: Consumer Price Index (CPI). Jobless Claims. Friday: Consumer Sentiment. Source: Econoday, February 4, 2022 This Week: Companies Reporting EarningsMonday: Amgen, Inc. (AMGN). Tuesday: Pfizer, Inc.(PFE), Chipotle Mexican Grill, Inc. (CMG), Sysco Corporation (SYY). Wednesday: CVS Health Corporation (CVS), The Walt Disney Company (DIS), Twilio, Inc. (TWLO), Yum Brands, Inc. (YUM), O’Reilly Automotive, Inc. (ORLY). Thursday: Twitter, Inc. (TWTR), The CocaCola Company (KO), Illumina, Inc. (ILMN), Duke Energy Corporation (DUK), PepsiCo, Inc. (PEP), Kellogg Company (K), Expedia Group, Inc. (EXPE). Friday: Dominion Energy, Inc. (D). Source: Zacks, February 4, 2022 |
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“Keep some room in your heart for the unimaginable.” – Mary Oliver |
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Did You Know That You Have the Right to Challenge the IRS?As a taxpayer, you have the right to challenge the IRS’ position. This is part of the Taxpayer Bill of Rights, which outlines your fundamental rights when working with the IRS. With this right, you can:
In some circumstances, you may have the opportunity to have a hearing before an independent Office of Appeals. * This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional. Tip adapted from IRS.gov8 |
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Zero-Waste Grocery Shopping TipsThere are many ways to have an eco-friendly shopping trip at the grocery store. Here are a few tips to reduce plastic usage and aim for a zero-waste trip to the store:
Tip adapted from Green Matters9 |
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They never move, even when we walk on them, but signs and arrows may indicate that they go “up” and “down.” What are they? Last week’s riddle: Two children are born in the same hospital (and in the same hospital room) in the same year, month, day, and minute. They have the same two parents, yet they are not twins and have no brothers. How is this possible? Answer: They are sisters, and their mother had triplets (all girls). |
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Field of sunflowers (Helianthus annuus) on the island of Noakhali, South-eastern Bangladesh. |
Footnotes and Sources1. The Wall Street Journal, February 4, 2022 2. The Wall Street Journal, February 4, 2022 3. The Wall Street Journal, February 4, 2022 4. The Wall Street Journal, February 1, 2022 5. CNBC, February 2, 2022 6. CNBC, February 3, 2022 7. CNBC, February 4, 2022 8. IRS.gov, September 1, 2021 9. Greenmatters.com, November 19, 2020 |
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