A look inside our December market update:

• Inflation appears to have peaked and is moving downward
• The November jobs report highlights just how tight the labor market is. Wages and job gains were a big surprise to the upside in November, with overall wages increasing .6% month-over-month and 261k jobs added, well above estimates.
• The November jobs report was positive for the economy, but not the best news for the markets, with investors quietly hoping for a Fed pivot in interest rate hikes or at least a slowdown in the speed and size of those hikes.
• With interest rates topping out sooner or later with slower expected growth, institutional investors are really starting to lock in the higher rates at longer maturities
• The real risk for the stock markets going forward outside of any further inflationary shocks, is earnings compression from lack of demand and persistent higher costs.
• If margins start to flatline or even decrease, it could be quite damaging to stock prices given that, with the bear market rally, valuations are even more expensive than a few months ago.
• The broad US stock market is just around 16% lower than all-time highs, although many big tech stocks have not recovered nearly as much.
• Value, low volatility, and profitability are still the focus for stocks in our view going forward.

For all of the adversity and stresses that the world and the financial markets have faced throughout the year, there have been healthy developments. Bonds are becoming bonds again, excesses are being removed, and various discounts and opportunities for stock ownership at a reasonable price now exist.

Don’t forget to check out our Monthly Market Update- December 2022.

Questions? Contact us.

Investment Advisory Services offered Through KLR Investment Advisors LLC
951 North Main St, Providence, RI 02904