Weekly Market Commentary December 8th, 2022

The Markets

What will it take to slow this economy down?

In 2001, railway workers slowed a runaway train in Ohio by latching a second engine to the back of the locomotive and applying the brakes. In all, the train traveled sixty-six miles over two hours, decelerating from a maximum speed of 47 miles per hour to 10 miles per hour before workers regained control of it, according to CNN.

Throughout 2022, the United States Federal Reserve and other central banks, including the Bank of Canada (“BoC”), have been trying to slow inflation by putting the brakes on their respective economies. 

So far, the Fed has raised rates six times (the BoC has done the same), but the economy continues to grow apace. Last week, the Bureau of Economic Analysis reported the American economy grew faster than originally thought from July through September 2022. Gross domestic product (GDP), which is the value of all goods and services by a country, in this case the United States, was up 2.9 percent, annualized, rather than 2.6 percent as the advance estimate indicated. This is directly comparable to Canadian GDP, which TD Economics reported also grew by 2.9 percent on an annualized basis.

Last week’s unemployment report from south of the border also suggested the economy remains strong. More jobs were added than economists expected, and the unemployment rate remained at 3.7 percent. This is in contrast to Canadian unemployment numbers, which are currently sitting somewhat higher at 5.1 percent as of the end of November.

All in all, stock and bond markets rallied last week following Federal Reserve Chair Jerome Powell’s mid-week speech, in which he confirmed it was likely December’s rate increase would be smaller than the last few increases have been. Later in the week, the strong employment report checked investors’ enthusiasm. Regardless, major U.S. indices (as well as the S&P/TSX Composite), finished higher, reported Nicholas Jasinski of Barron’s, and Treasury yields finished the week mostly lower.

Source: FactSet

Recent Video:

Can you believe it is December already?

According to Andy Williams, Garth Brooks and Kylie Minogue, “It’s the Most Wonderful Time of the Year.” During December, holiday enthusiasts don ugly sweaters, wheedle recipes out of relatives, light a wealth of candles, and celebrate a diversity of holidays. See what you know about this magical time of the year by taking our brief quiz.

1. Which of the following holidays is NOT celebrated in December?
a. International Ninja Day
b. Sacher-Torte Day
c. Dewey-Decimal System Day
d. National Take Down the Christmas Tree Day

2. Scientists have studied the psychology of gift giving. They find that the most valued presents are:
a. Expensive gifts that make others envious
b. Beautifully wrapped gifts that are pleasing to the eye
c. Sentimental gifts that bring joy and happiness
d. Thoughtful gifts that reflect the recipient’s hobbies and interests

3. Which generation is expected to spend the most ($1,823) on gifts, travel and entertainment this holiday season?
a. Gen Z (Ages 9 to 24)
b. Millennials (Ages 25 to 40)
c. Gen X (Ages 41 to 56)
d. Boomers (Ages 57 to 75)

4. When did the New Year’s Eve ball drop first take place in Times Square? (Hint: Teddy Roosevelt was President.)
a. 1893
b. 1907
c. 1920
d. 1945

If you have any questions, get in touch.

Weekly Focus – Think About It

“Gratitude unlocks the fullness of life. It turns what we have into enough, and more. It turns denial into acceptance, chaos to order, confusion to clarity. It can turn a meal into a feast, a house into a home, a stranger into a friend.”

—Melody Beattie, author

Best regards,

Answers: 1) d; 2) c; 3) b; 4) b

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