1/8/23 Newsletter – Beating the Inflation Nation in 2023

Amanda Greenbrier
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The First Week of 2023 is in the Books!

The stock market soared Friday, capping off the first week of trading for 2023 after the latest U.S. employment result showed a decline in the number of jobs added. 

That’s good news for the Federal Reserve—and investors.

The Dow Jones Industrial Average jumped 701 points, or 2.1%. 

The S&P 500 rose 2.3% and the Nasdaq Composite popped 2.6%. 

Friday’s gains brought the indexes to weekly gains; the Dow, S&P 500 and Nasdaq gained 1.5%, 1.7% and 1%, respectively this week.

The first week of trading in 2023 is in the books and some Investors are probably happy to shut the door on 2022 after the worst year for stocks since the 2008 financial crisis. 

Now, Wall Street is assessing whether the new year will further punish investors or if it could offer some relief to battered portfolios. 

Last year’s decline has led to trillions in losses and caused the typical 401(k) to shed $1 of every $5 through the third quarter, according to Fidelity. 

This is why individual stock selection is so important in today’s market.

The market as a whole is going to overreact to events because of the herd mentality that affects so many investors. 

 (The only thing you can do is stay away from the mainstream herd… Stick with us instead!)

Non Farm Payroll Report From Friday 1/6/23

For those of you who are new or don’t know, Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications. 

This is measured by the Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the U.S. about their payrolls. 

The BLS reports the nonfarm payroll numbers to the public on a monthly basis through the closely followed “Employment Situation” report.

In addition to farm workers, nonfarm payrolls data also excludes some government workers, private households, proprietors, and non-profit employees.

The “Employment Situation” report is a closely followed monthly report released by the BLS on the first Friday of the month subsequent to data reporting collection. 

Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications.

The nonfarm payrolls classification excludes farm workers as well as some government workers, private households, proprietors, and non-profit employees.

The data on nonfarm payrolls is collected by the Bureau of Labor Statistics (BLS) and put in its monthly “Employment Situation” report, which also includes the unemployment rate.

The BLS’s “Employment Situation” report is always released at approximately 8:30 a.m.

On Friday, 1/6/2023, the Non Farm Payroll report for December was released and showed that nonfarm payrolls rose +223,000. The results were stronger than expectations of +203,000.  

The US economy added 223,000 jobs in December of 2022, the least since December of 2020, after a downwardly revised 256K rise in November, and beating market expectations of 200K. 

Notable job gains occurred in leisure and hospitality (67K), health care (55K), construction (28K), and social assistance (20K) while employment changed little in manufacturing (8K), retail trade (9K) and government (3K). 

Payroll employment rose by 4.5 million in 2022, an average monthly gain of 375K, compared to 562K per month in 2021 and 168K in 2019. 

The report continued to show that hiring is slowing although it remains strong, as the labor market is normalizing after the pandemic shock. 

For 2023, the labor market is set to remain tight but job growth will slow further and the unemployment rate is set to rise to 4.6%, according to Fed forecasts. 

Amazon Announces Job Cuts!

Typically the worst month for layoffs, January is off to an auspicious start with recent news that Amazon(AMZN) has announced plans to eliminate more jobs..

Amazon’s ongoing layoffs will affect around 18,000 workers, according to a memo from CEO Andy Jassy, which says that the “majority” of the roles being eliminated will be in Amazon Stores and People, Experience, and Technology organizations.

That’s significantly more than previously rumored — in November. 

The New York Times reported that the company was aiming to cut its workforce by around 10,000.

 In September 2022, the company said it had around 1.5 million employees in total.

The news of the expanded layoffs was originally reported by The Wall Street Journal, which said that they would affect “over 17,000 workers.” 

Over the past few months, Amazon admitted it was consolidating some teams and programs in its hardware and services division.

However, the company had never officially confirmed the original number. 

CEO Andy Jassy did tell workers that there would be “more role reductions as leaders continue to make adjustments” in 2023, but until now, the company’s been very vague about how many positions are being affected.

Many big tech firms have already announced massive layoffs amid rising interest rates, weak consumer demand, and a global economic slowdown. 

Salesforce (CRM) said it would slash 10% of its workforce and execute select real estate exits and office space reductions. 

Twitter, Meta, Stripe, and Lyft have also indicated layoffs could be coming.

What is the ISM Services Index?  …And Why it Matters to You.

The ISM Services Index is a measure of economic activity in the service sector of the United States. 

It is based on a survey of purchasing and supply management professionals in the service sector, and is compiled by the Institute for Supply Management (ISM).

The index is based on a scale of 0 to 100, with a reading above 50 indicating expansion in the service sector and a reading below 50 indicating contraction. The ISM Services Index is considered a leading indicator of economic activity, as the service sector represents a large portion of the overall economy.

The ISM Services Index is released on the first business day of each month, and includes data on employment, new orders, prices, and supplier deliveries. 

It is closely watched by economists and investors, as it provides insight into the health of the service sector and the overall economy.

Overall, the ISM Services Index has trended upward in recent years, indicating strong growth in the service sector. 

However, like any economic indicator, it is subject to fluctuations and can be influenced by a variety of factors, including economic conditions, government policies, and global events. 

The December 2022 ISM services index fell sharply by -6.9 points to a 2-1/2 year low of 49.6, and was weaker than expectations of 55.0.

Remember: Numbers under 50% are a sign the economy is contracting.

The closely followed ISM reports are the first major indicators of each month to offer clues on how well the economy is performing.

Economists polled by The Wall Street Journal had expected the index to drop to 55.1% from 56.5% in November. 

The huge service side of the economy had been growing steadily, but the latest ISM reading suggests erosion in business conditions at the end of the year.

The Federal Reserve is raising interest rates to bring down high inflation, a strategy that typically causes consumers and businesses to cut spending. 

Many economists think the U.S. is headed for a recession in 2023.

But like I said before, we’re not afraid of a recession because we’re focused on individual stock selection. 

Warning: Consumer Price Index (CPI) Report Coming Next Week!

This coming Thursday (1/12/2023) ,the Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) Report. 

The CPI (Consumer Price Index) report is a monthly publication by the United States Bureau of Labor Statistics that measures the price changes of a basket of goods and services consumed by households. 

The BLS uses the CPI to calculate the inflation rate, which is the percentage change in the overall price level from one period to another.

The basket of goods and services in the CPI is representative of the purchases made by urban consumers, which includes almost all Americans. The BLS updates the basket periodically to ensure that it reflects the current consumption patterns of households. 

The basket consists of over 200 categories of goods and services, such as food, housing, transportation, medical care, and entertainment.

The BLS calculates the CPI by comparing the price of the basket of goods and services in a base year to the price in the current period. 

The base year is usually set to 100, and the CPI for each subsequent period is calculated as a percentage of the base year. 

For example, if the CPI in the base year is 100 and the CPI in the current period is 110, the inflation rate is 10%.

The BLS CPI report is closely watched by investors, policymakers, businesses, and households as it provides a measure of the overall cost of living in the country. 

The Federal Reserve, for example, uses the CPI to help guide its monetary policy decisions, such as setting interest rates.

The consumer price inflation rate in the US eased for a fifth straight month to 7.1 percent in November 2022, the lowest since December 2021 and below market expectations of 7.3 percent. 

Still, the latest reading remained well above the US Federal Reserve’s 2 percent target. 

On a monthly basis, the non-seasonally adjusted CPI edged down 0.1 percent to 297.711 points, while the seasonally adjusted index was up 0.1 percent, the lowest in three months and also below consensus of 0.3 percent.

Consumer Price Index CPI in the United States is expected to be 305.90 points by the end of this quarter, according to several global macro models and analysts expectations. In the long-term, the United States Consumer Price Index (CPI) is projected to trend around 309.13 points in 2024 and 315.01 points in 2025, according to our econometric models.

Who Made New 52-Week Highs This Week?

Here are some notable highs as of Friday, January 6, 2023…

Taking the cake this week for the first time is Rhythm Pharmaceuticals (RYTM) after climbing 1,026.32% from its 52-week low.

Coming in second place this week is Astri Therapeutics (ATXS) after moving up over 550% from its 52-week low.

And Immunovant (IMVT) came in third place after rising over 527% from its 52-week low.

If you’re interested in discovery stocks that have the potential for making 1,026%, 550%, or 527% moves like the top 3 stocks above, then you’re in luck…

Because we have been hard at work uncovering what could be the next big stock play for you.

You need to stay tuned and stay engaged because we just identified a company that could be our next idea. 

We are still finishing up our research but as soon as this report is done, you’ll be one of the first to see it…

So clear your plate and get ready.

PS: [Bleep…] the Recession Talk… We’re not scared of a recession because we shop in a Stock Pickers Market…

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