What a year!  

In some ways, it feels as though we lived through several years in 2022. The onslaught of events included, “The first major European war since the 1990s, unprecedented sanctions, energy-price mayhem, bail-outs, global interest rates rising at their fastest pace in four decades, a faltering Chinese economy, an overheating American one, housing markets looking peaky across the rich world, [and] a crypto blow-up for the ages…,” reported Hamish Birrell in The Economist’s Money Talks newsletter.

The impact of these events was felt around the world. Global inflation averaged 10 percent, and global stock markets were down about 20 percent through November, reported The Economist. Yet, some countries showed remarkable economic resilience, performing far better than average. The Economist surveyed economic and financial data from 34 wealthy countries. The data included gross domestic product or GDP (which is the value of all goods and services produced in a nation), inflation, breadth of inflation, stock market performance and government debt.

Many of the top performers were in the Mediterranean. They tended to have better-than-average stock market performance, declining debt-to-GDP ratios*, strong economic growth, and/or below average inflation. The top 10 included:

• Greece
• Portugal
• Ireland
• Israel
• Spain
• Mexico
• Canada
• Japan
• France
• Italy

The United States ranked 20^th, although its position may have skewed low. The author opined, “America’s GDP numbers are misleadingly weak: in recent quarters official statisticians have struggled to account for the impact of enormous stimulus packages.”

 Last week, major U.S. stock indices delivered mixed results as economic data, created uncertainty reported Nicholas Jasinski of Barron’s. Positive earnings news and strong labor market data were countered by cooling inflation and slower consumer spending. The Standard & Poor’s 500 Index and the Nasdaq Composite moved lower, and the Dow Jones Industrial Average rose. Treasury bond yields generally moved higher.

OUT WITH THE OLD. IN WITH THE NEW. Every new year brings new ways of doing things. Here are some of the trends and ideas that may shape 2023 (or not).

Challenging your taste buds. “Flavors that violate [consumers’] expectations are sure to be a hit…unexpected and unique flavor combinations will be in demand going into 2023.” Spoiler alert. If you want to be surprised by 2023’s new flavors stop reading here. If you want to warn your tongue what may be coming, prepare for dragon fruit and Vietnamese-Cajun.

Traveling for inner growth. One of the top travel trends in 2023 will be transformation retreats, according to Sarah Allard of Condé Nast Traveler. “…2023 will be the year we travel for personal betterment. Whether you are seeking to overcome grief, identify your life’s mission, or discover what your body is physically capable of, there will be a transformation retreat that caters to it.” Another anticipated trend is “set-jetting,” visiting countries where your favorite movies and television shows are filmed.

Dowsing for fresh water. 2023 may be the year that water-strapped cities and regions begin harvesting water vapor. That’s the suggestion offered by scientists at the University of Illinois at Urbana-Champaign who have been researching sources of fresh water. “A new study suggests an investment in new infrastructure capable of harvesting oceanic water vapor as a solution to limited supplies of fresh water in various locations around the world,” reported Science Daily.

And now for something completely different. If you’re bored with your current exercise routine, you might consider the Ministry of Silly Walks workout. A tongue-in-cheek study published in the British Medical Journal found that inefficient walking (of the type seen in Monty Python’s Ministry of Silly Walks skit) burns lots of calories. “Adults could achieve 75 minutes of vigorous intensity physical activity per week by walking inefficiently for about 11 min/day. Had an initiative to promote inefficient movement been adopted in the early 1970s, we might now be living among a healthier society.”

We hope you have a safe and happy New Year celebration.

Weekly Focus – Think About It
“Write it on your heart that every day is the best day in the year.”
—Ralph Waldo Emerson, philosopher

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Sources:

https://www.economist.com/newsletters [Money Talks newsletter] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/12-27-22_The%20Economist_We%20Look%20at%20the%20Bright%20Side%20of%202022_1.pdf)
https://www.economist.com/finance-and-economics/2022/12/18/2022s-unlikely-economic-winners (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/12-27-22_The%20Economist_2022s%20Unlikely%20Economic%20Winners_2.pdf)
https://www.barrons.com/articles/stocks-limp-toward-2023-as-the-data-show-few-signs-of-a-clear-direction-51671841571?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/12-27-22_Barrons_Stocks%20Limp%20Toward%202023_3.pdf)
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202212
https://corporatefinanceinstitute.com/resources/economics/debt-to-gdp-ratio/
https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-5391
https://www.foodbusinessnews.net/articles/22886-flavors-to-watch-in-2023
https://www.cntraveler.com/story/17-travel-trends-youll-see-in-2023
https://www.sciencedaily.com/releases/2022/12/221206083115.htm
https://www.bmj.com/content/379/bmj-2022-072833
https://www.brainyquote.com/topics/new-years-quotes

Hawkish comments by the Fed and weak economic data heightened investors’ recession concerns and sent stocks lower last week.

The Dow Jones Industrial Average lost 1.66%, while the Standard & Poor’s 500 retreated 2.08%. The Nasdaq Composite index declined 2.72% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.88%.^1,2,3

Stocks Under Pressure

Stocks began the week on a positive note, supported by a cooler-than-expected Consumer Price Index (CPI) report. Stocks reversed direction mid-week, however, following the Federal Open Market Committee (FOMC) meeting in which another 0.5% rate hike was announced.

The half-point increase was widely anticipated, but the increase in the terminal rate (i.e., the point at which the Fed stops raising rates) rattled investors. Continued hawkishness by Fed Chair Powell at the post-meeting press conference added to investors’ anxiety. The potential for higher rates for longer, along with disappointing economic data, particularly a sharp decline in retail sales, amplified fears of a recession and sent stocks lower for the remainder of the week.

Inflation And The Fed

The release of November’s CPI showed inflation cooling for the second consecutive month, as prices rose just 0.1% month-over-month and 7.1% from a year ago. Both were better than expected.⁴

The FOMC ended its last meeting of 2022 by raising interest rates another 0.5% and signaling that it would likely continue to hike rates into the new year. At a subsequent press conference, Fed Chair Powell commented that the next rate increase could be a quarter-percentage point. Most FOMC members appear to support raising the terminal rate (the point at which hikes end) to above 5%, up from its September projection of 4.6%.⁵  

This Week: Key Economic Data

Tuesday: Housing Starts.

Wednesday: Consumer Confidence. Existing Home Sales.

Thursday: Jobless Claims. Gross Domestic Product (GDP). Index of Leading Economic Indicators.

Friday: New Home Sales. Durable Goods Orders. Consumer Sentiment.

^{Source: Econoday, December 16, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: FedEx Corporation (FDX), Nike, Inc. (NKE), General Mills, Inc. (GIS).

Wednesday: Micron Technology, Inc. (MU).

^{Source: Zacks, December 16, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“Love is the master key that opens the gates of happiness.”
– Oliver Wendell Holmes

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How To Start Journaling

Journaling has many potential benefits, from increased focus to more detailed goal-setting. Want to pick up the habit of journaling but need help figuring out where to start? Here are some tangible tips to get you started:

• Start small. Sometimes, the idea of starting a whole new journal can be overwhelming. Start by writing just one prompt or setting a timer for 2 minutes.

• Pick the simplest tools, and pick tools you love. You’re more likely to enjoy journaling if you enjoy the journal and pen themselves!

• Depending on your journaling style, you can either start with a prompt or start with free writing. Free writing is the act of writing whatever comes to mind.

• Let it all out and write without censoring yourself. One tip: try writing as fast as possible, so you don’t have time to edit!

Tip adapted from Healthline⁷

Name the three English-language three-letter words that begin and end with the letter E.

Last week’s riddle: What item binds two people yet touches only one? Answer: A wedding ring.

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Chiyoda City, Tokyo, Japan

Footnotes and Sources

<sup>1. The Wall Street Journal, December 16, 2022
2. The Wall Street Journal, December 16, 2022
3. The Wall Street Journal, December 16, 2022
4. CNBC, December 13, 2022
5. The Wall Street Journal, December 14, 2022
6. IRS.gov, August 8, 2022
7. Healthline, February 22, 2022</sup>

Recession fears and concerns that the Fed may consider a longer rate-hike cycle sent stocks lower for the week.
The Dow Jones Industrial Average dropped 2.77%, while the Standard & Poor’s 500 fell 3.37%. The Nasdaq Composite index lost 3.99% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dipped 1.09%.^1,2,3

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Stocks Slide

Stocks were under pressure much of the week due to resurgent recession fears and concerns that Fed rate hikes may go higher for longer than current expectations. There was some good news last week on the economic front and out of China, which started to loosen COVID restrictions. But it was a week where good news was considered bad news, as any signs of economic resilience stoked worries of a longer rate-hike cycle.

Higher continuing jobless claims signaled economic softness, triggering a Thursday rally. But stock prices were under pressure Friday following a disappointing Producer Price Index (PPI) number.

Producer Inflation Disappoints

The Labor Department reported that the PPI rose 0.3% in November and 7.4% from a year ago. Though wholesale prices inflation rose at the slowest 12-month pace since May 2021, they exceeded market expectations. Price pressures were felt most in the services sector, where costs rose 0.4% after a 0.1% increase the month before. Goods inflation eased to a rise of 0.1%, a sharp drop from its October gain of 0.6%.⁴

Though the PPI number dented the optimism around cooling inflation, November’s PPI report represented an improvement from its 11.7% peak in March.⁵  

This Week: Key Economic Data

Tuesday: Consumer Price Index (CPI).

Wednesday: Federal Open Market Committee (FOMC) Meeting Announcement.

Thursday: Jobless Claims. Retail Sales. Industrial Production.

Friday: Purchasing Managers’ Index (PMI) Composite.

^{Source: Econoday, December 9, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Thursday: Adobe, Inc. (ADBE).

Friday: Darden Restaurants, Inc. (DRI).

^{Source: Zacks, December 9, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

“The winter of the spirit must be journeyed through, and it must not only be conquered but the benefits used. Yet without it maturity cannot arrive.”
– Jane Roberts

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Traveling for Work? Here’s What You Need to Know About Business-Related Travel Deductions

Business travel deductions are available when employees travel away from their tax home or principal place of work for business reasons. The travel period must be substantially longer than an ordinary day’s work, and a need for sleep or rest to meet the demands of the work while away.

Some examples of deductible travel expenses include:

• Airline, bus, or train tickets or mileage rates to drive

• Fare for taxes or other types of transportation between an airport to a hotel and from a hotel to a work location
• Baggage fees
• Lodging
• Dry cleaning or laundry

If you are self-employed, you can deduct your travel expenses using Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship).

* 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.gov⁶

Meet The Warrior Poses of Yoga

These warrior poses can help stretch and strengthen your body and are the foundation of most yoga practices. Let’s meet the five warrior poses of yoga!

• Warrior I – In warrior I, the front knee is bent, and the hips are turned to the front of your mat. Your arms are raised.

• Warrior II – Warrior II is a lateral pose with your front knee bend, and your hips turned to the side. Your arms are parallel to your hips.
• Warrior III – Balancing on one foot, the standing leg is straight, and the opposite leg is lifted behind you when your arms reach forward.
• Humble/Peaceful Warrior – Your legs are in the same position as Warrior II, but your chest is bent toward your front leg with your arms clasped behind your back.
• Reverse Warrior – Your legs are in the same position as Warrior II, but your arms and torso reach backward, and your chest is facing the sky.

Tip adapted from Yoga Basics⁷

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What item binds two people yet touches only one?

Last week’s riddle: A train moving as fast as it can go strikes a man’s hand, yet he is uninjured and the train goes off its tracks. Under what circumstances could this happen? Answer: The train that strikes the man is a toy train running around on a model set.

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Great Barrier Reef, Australia

Footnotes and Sources

<sup>1. The Wall Street Journal, December 9, 2022
2. The Wall Street Journal, December 9, 2022
3. The Wall Street Journal, December 9, 2022
4. CNBC, December 9, 2022
5. CNBC, December 9, 2022
6. IRS.gov, August 8, 2022
7. Yoga Basics, March 11, 2021</sup>