Cela's Weekly Insights - January 15, 2023

Welcome to this week's newsletter, where we dive into the latest market trends and developments.

So, the year started off with stocks rising and bond yields falling, which is the opposite of what happened in the previous year. Everyone was keeping an eye on the December inflation reading to see if these trends would continue. And, it looks like they did! The consumer price index (CPI) slowed down even more in December, making it the smallest increase since October 2021. This, along with data from November and October, shows that inflation is slowing down for three months in a row. Could we possibly see deflation this year?

The good news is that this means the Federal Reserve (Fed) might slow down the pace of their rate hikes. Prices are still high, but the gradual cooling of inflation is a good sign. Goods prices, like cars, have been declining for the past three months and that trend is likely to continue. However, services prices, like housing, have gone up a bit. But, experts think that housing prices will start to decrease as interest rates go up.

All in all, it looks like inflation is slowly going down and the Fed might slow down their rate hikes. This is good news for the stock market and the economy. The Fed has paused seven times in the past 40 years after a tightening cycle, and during those pauses, stocks performed well and the economy improved. We'll have to wait and see what the Fed decides to do at their next meeting on February 1st. Overall, it is a good time for the Fed to take a pause and evaluate the condition of the economy before making any further decisions.

Last Week's Market Performance: A Global Overview

The stock markets across the globe had a solid week, with many indices showing positive growth. As you can see from the table below, many major markets ended the week on a high note, indicating a strong performance overall.

The German market is off to a strong start, with gains of 3.26% for the week and 8.35% year-to-date. Great performance, time to relax, sit back and celebrate with a cocktail or two, right?

The S&P 500 also saw positive growth this week, finishing with gains of 2.67%. The NASDAQ, on the other hand, outpaced the S&P 500 as market participants anticipate potential rate cuts in the second half of the year due to a decline in inflation.

When it comes to the Chinese stock market, it's important to take a step back and look at the long-term picture. While the market is off to a strong start, there's still a long way to go.

Brent oil experienced a loss of over 8% last week, but managed to recover those losses this week. However, the overall trajectory has been on a downward trend since its peak in early June of last year.

As we discussed in previous newsletters, the expected strength of the euro has been evident for some time now. This week, gold managed to break above the critical mark of 1,900 USD and finished the week with gains of 2.91%. With bond yields dropping, gold is once again being considered a safe haven asset.

Bitcoin has been gaining a lot of momentum, as investors seem to be buying in. It saw more than a 10% gain and even rose above the crucial 20,000 USD mark on Saturday. As inflation appears to be less of a threat, 10-year US Treasury yields have also dropped from their peak in November 2022.

*** Last Week's Survey Results | Calender Week 02/2023

In last week's poll conducted on LinkedIn and Instagram, a majority of participants predicted a positive performance for the S&P 500.

56% of LinkedIn respondents and 70% of Instagram respondents voted in favor of this outcome. As it turns out, these predictions were accurate, as the S&P 500 ended the second calendar week of 2023 with a positive performance of 2.67%.

Year to date, the index has also demonstrated a positive trajectory, with an overall increase of 4.16%.

What can we expect from the S&P 500 in the upcoming (03/2023) week? You can vote here

As we wrap up today, I wanted to share that my friend Dr. Thomas Hammer, MBA has launched a survey on the impact of financial education on entrepreneurship. By participating in the survey, which is in German, Thomas will donate 1€ to the Bündnis ?konomische Bildung Deutschland e.V. organization. Here is the link to the survey: Einfluss Finanzieller Bildung auf Unternehmertum | empirio

That's all for today folks. If you've made it this far, thanks for tuning in ??.

Cheerio!

Endrit Cela The Investment Fella -?#ECB ?#mm ???