In today\u2019s Steady Investor, we are taking a deeper dive into key factors that we believe are impacting the market and what\u2019s to come this upcoming year, such as:<\/p>\n\n\n\n
The U.S. Labor Market is an Ongoing Headache for the Fed \u2013 <\/strong>Headline inflation in the U.S. is heading in the right direction, with goods inflation falling significantly in the second half of 2022 as supply chain pressures eased and commodity prices fell from peaks. Falling goods inflation is good news, but the services side of the equation continues to cause problems for the Fed\u2019s view on overall inflation. Fed Chairman Powell\u2019s biggest concern is the effect the tight labor market has on wages, which in many cases influences companies to raise prices to make up for higher costs. Powell specifically remarked that \u201cthe labor market continues to be out of balance, with demand substantially exceeding the supply of available workers.\u201d Data released this week didn\u2019t help. The Labor Department reported that job openings in the U.S. remain above 10 million (as of the end of November), which far exceeds the roughly 6 million Americans out of work. Initial jobless claims in the final week of December \u2013 which gives a read on layoffs \u2013fell by 19,000, which signals that employers continue to cling to workers. What\u2019s more, according to a recently issued report by the Atlanta Fed, workers who stayed at their jobs experienced an average wage bump of 5.5% in November 2022 compared to the year prior, which is higher than the 3.7% wage growth reported in January 2022 and also marks the largest increase in 25 years. A persistently tight labor market is a problem for the Fed and also for the market\u2019s hope for a \u201cFed pivot\u201d in 2023. Ongoing tightness in the labor market could cause inflation to become entrenched, which also implies the need for higher rates.1<\/sup><\/p>\n\n\n\n Keep Your Investments Protected in a Potential Bear Market!<\/u><\/strong> Don\u2019t despair! You can potentially avoid the most harmful hazards of a bear market on your investments by making use of some useful tools I offer in our free guide – The Zacks Bear Market Survival Kit<\/em>.2<\/sup><\/p>\n\n\n\n This guide discusses some key tools to prepare for a bear market, including:<\/p>\n\n\n\n \u00a0 The Fed vs. The Stock Market \u2013 <\/strong>A closer look at the minutes from the December 2022 Fed meeting show a central bank increasingly concerned about stock market rallies. Part of the issue is that investors are anticipating a sharp decline in inflation in 2023, which in turn has driven hope that the Fed would stop raising rates and perhaps even lower them in 2023. The gap between where the market thinks inflation will land in 2023 and where the Fed sees inflation is meaningful \u2013 according to Barclays, the bond markets are projecting the consumer price index will fall to 2.6% by the end of 2023, which would arguably put the Fed\u2019s preferred PCE price index very close to the 2% target. Meanwhile, the Fed raised its 2023 core PCE inflation forecast from 3.1% to 3.5% at its most recent December meeting. The Fed is increasingly concerned that the market\u2019s optimism over lower inflation will also drive hope over a \u201cFed pivot\u201d in the new year, which in turn will lead to market rallies. The problem with market rallies, according to the Fed, is that easing financial conditions could hurt their efforts to cool hiring and wage growth, which as mentioned above is a top concern.3<\/sup><\/p>\n\n\n\n China\u2019s Economy Suffers, for Now \u2013 <\/strong>China\u2019s economy continues to reel from the hangover of \u201czero Covid\u201d policies followed by the rapid spread of the virus as restrictions were lifted. Activity in China\u2019s manufacturing and services sectors has plummeted to levels last seen during global economic lockdowns. China\u2019s purchasing managers index (PMI) dropped to 47.0 in December, and anything below 50 signals a contraction. But that wasn\u2019t even the worst data point \u2013 in the key services sector, PMI fell from 46.7 in November to 41.6 in December. The transition to an open economy is likely to be messy in the first quarter, particularly as winter months combined with low levels of natural immunity make handling Covid outbreaks much more challenging. But at the same time, a trough in economic activity argues for a strong rebound once the transition to reopening has taken place, much like the rest of the developed world experienced in 2021. The Chinese government has also signaled a willingness to inject fiscal stimulus into the economy, which could boost growth in the second half of the year and contribute to a rebound in the broader global economy.4<\/sup><\/p>\n\n\n\n What Happens to Your Investments in a Bear Market<\/strong>? Investors should remember that inflation and volatility is a natural (if unpleasant) part of the economic cycle, but you can potentially avoid the most harmful hazards of a bear market on your investments by making use of some useful tools we offer in our free guide, The Zacks Bear Market Survival Kit<\/a><\/strong><\/em>.5<\/sup><\/p>\n\n\n\n This guide discusses some key tools to prepare for a bear market, including:<\/p>\n\n\n\n The labor market remains persistently tight, the Fed’s issues with market rallies, China’s economy still struggling but could rebound in 2023<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12192","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12192"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12192\/revisions"}],"predecessor-version":[{"id":12194,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12192\/revisions\/12194"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/a>\u00a0
Market volatility concerns come with a lot of worries from investors about how to manage their investments if the market reaches bear market territory.<\/p>\n\n\n\n\n
In this guide, you\u2019ll get our viewpoint on the most important moves you can make to weather a recession. Don\u2019t wait\u2014if you have $500,000 or more to invest, get this guide before the storm hits.
\u00a0
The Zacks Bear Market Survival Kit2<\/sup><\/a><\/u><\/strong><\/p>\n\n\n\n\n
If you have $500,000 or more to invest, get our free guide today. You\u2019ll get our viewpoint on the most important moves you can make to weather a recession. Don\u2019t wait\u2014get this guide before the storm hits.<\/p>\n","protected":false},"excerpt":{"rendered":"