This week the Federal Reserve Bank met this week and surprised most by raising the key Fed Funds rate by 0.50%. The markets reacted strongly on Thursday 12/15 by declining by 900 points at one point. November inflation had come in 0.1% higher than the previous month. Bad news for those trying to buy a home as mortgage and HELOC rates will increase. We may see consumer lending rates, like car loans, rise as well. Consumers are piling up credit card debt as prices continue to rise while incomes remain relatively flat.
One bright spot – CD rates should remain strong and provide respite from the volatile stock market.
- Congress started their investigation on the FTX fiasco with Kevin O’Leary of Shark Tank fame and ‘The OC’ actor Ben McKenzie Schenkkan both testifying. We have learned former CEO Sam Bankman-Fried made sizeable campaign contributions to BOTH the Democratic and Republican parties in order to influence the direction of policies and laws affecting the cryptocurrency industry.
- Those politicians who have been identified as receiving contributions are either keeping quiet, returning the contribution or donating the contributions to charity
- Where to find opportunities in this volatile market?
- Although technology has suffered significant losses in 2022 (down 24%+ YTD), there are some opportunities to be found.
- Some long-term trends for growth could include be found in cloud computing, 5G and semiconductor firms.
- Roughly 60% of corporate workloads have been moved to the cloud and that is expected to rise to 75% by 2025
- Some long-term trends for growth could include be found in cloud computing, 5G and semiconductor firms.
- Although technology has suffered significant losses in 2022 (down 24%+ YTD), there are some opportunities to be found.
- Energy continues to be a big winner, ‘fueled’ by tight supply and rising demand. Those dynamics should continue into 2023
- As the US (and the world) move from petroleum-based energy to electro-based energy, utilities could have benefit with potential long-term growth
- The sector is historically a defensive one and has return about 1.50% YTD
- Lastly, healthcare, another defensive play, has outperformed the broad US market returning -0.83% YTD (vs. the S&P 500 return of -15%)
- The sector offers a compelling combination of both defensive and growth characteristics of the healthcare-related firms
- And in other news, AirBNB has been the focus on many memes and shorts as consumers complain about the laundry list (literally) of chores guests are expected to do after their stay – laundry, cleaning, trash, dishes, etc. And this is after being charged a hefty cleaning fee! AirBNB Corporate has said they will adjust their website to make pricing transparent and clearly show ALL fees associated with their rental homes. Customers are moving back to traditional hotels with no chores and free breakfasts!