In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets in 2023 such as:
Inflation Slows in November, and Fed Raises Rates by 50 Basis Points – The November inflation figures were released last week, and consumer prices were seen trending in the right direction. According to the Labor Department, the consumer price index (CPI) measure of inflation rose by 7.1% year-over-year in November, which was a marked improvement from the 7.7% rate posted in October and is a significant decline from June’s 9.1% peak. Of course, a year-over-year inflation rate of 7.1% is well above the 2% average the Fed is targeting, but it also suggests that inflation’s peak in this cycle may be in the past – not the future. The Federal Reserve also met this week and announced a 50-basis point rate increase, which was a welcomed step down following four consecutive 75-basis point increases. The fed-funds rate now stands at a range between 4.25% and 4.5%, which marks a 15-year high for the benchmark interest rate. The step down from 75 basis point hikes to 50 bps signals that the Fed may be ready to continue scaling down their aggressive approach to monetary tightening, with Chairman Jerome Powell saying in the press conference that it was “broadly right” that the Fed could shift down further to 25 basis point increases in 2023 to allow for a smooth exit and also to manage the risk of over-tightening. As has been the case throughout 2022, the Fed also increased their forecast for the terminal fed funds rate – i.e., where the fed funds rate would peak in the cycle. That figure now stands at between 5% and 5.5%, with plans to hold it there until 2024. Investors should take these forecasts with a grain of salt, however. They’re almost always wrong.1
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Are Your Retirement Investments Protected?
Imagine working hard to build up your retirement, only to have events cause market volatility that could wipe out half of your portfolio. This is why it’s important to have an effective strategy in place to account for the market’s ups and downs.
Our free guide, How Solid Is Your Retirement Strategy? canhelp you build a retirement strategy that takes the “what ifs” into account.
This guide also offers our views on some key retirement investment strategies that may help you preserve your financial security in retirement, including:
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Keystone Pipeline Leak May Pinch U.S. Oil Reserves – A rupture in the Keystone pipeline in Kansas has spilled an estimated 14,000 barrels of oil, marking one of the largest spills in the U.S. in over 10 years. The pipeline has been shut down since December 7 as repairs are being made, which has cut off a key source of crude for Gulf Coast refiners. Hundreds of thousands of barrels have not flowed in the time the pipeline has been shut down, which appears likely to accelerate a decline in oil reserves at the key Cushing, Oklahoma storage hub. About 622,000 barrels of oil flow through the pipeline every day. Some analysts believe falling supply could put upward pressure on prices, but it remains to be seen whether this translates to higher prices at the pump. Demand for gas tends to fall in the winter months, and refiners can also source oil from other places to make up for lost supply.3
China’s Economy Stumbles at Year-End, But Looks to Rebound in 2023 – China’s economy is finishing the year with a whimper, an extension of troubles experienced throughout 2022. In November, due to continued restrictions and lockdowns associated with “zero-Covid,” China’s economy suffered setbacks as retail sales plummeted by 5.9% year-over-year. Unemployment in major cities rose from 5.5% in October to 5.7% in November, and the youth unemployment rate remains above 20%. Industrial production also plateaued in the month as factories were hit with the double-whammy of Covid restrictions and falling global demand. There is good reason to believe that China could experience a turnaround in 2023, particularly as protests and urging from businesses has led to an easing of Covid restrictions and a shift to broader economic reopening. China’s government is forecasting 5% GDP growth in the new year, and many Wall Street banks and economists see the growth even higher.4
How to Protect Your Retirement in This Economy – While there is no way to prevent market volatility, there is a way to protect your retirement assets through market ups and downs. We recommend finding a retirement strategy that takes the “what ifs” into account. Our free guide can help you to prepare for what’s to come as you plan your ultimate retirement.
If you have $500,000 or more to invest, get our free guide, How Solid Is Your Retirement Strategy.5 You’ll get valuable and practical ideas to help build a “weatherproof” retirement strategy that can potentially protect your retirement nest egg from any storm that could threaten your financial security.
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