2022 | December 27

The Market

Stocks Mixed

Although the Dow managed to post a small weekly gain, the S&P 500 and the NASDAQ fell for the third week in a row. With one week left in 2022, the S&P 500 was down 18% year to date on a total return basis and on track for its worst year since 2008.

Prices of government bonds fell sharply, sending their yields higher, after Japan’s central bank on Monday widened its target range for yields of Japanese 10-year bonds. In the United States, the yield of the 10-year U.S. Treasury bond climbed to 3.75% on Friday, up from 3.48% a week earlier.

The price of U.S. crude oil rose to nearly $80 per barrel on Friday, up around 7% for the week, in part due to expectations that Russia could cut its oil output. Meanwhile, U.S. refiners shut down capacity late in the week as a winter storm made it unsafe to operate plants.

Although its rate lags that of most of the world’s major economies, Japan’s inflation is rising at the fastest pace in more than four decades, as the government reported an annual rate of 3.7% on Friday. The news came four days after Japan’s central bank lifted its cap on a key interest rate from its previous near-zero level.

The U.S. Federal Reserve’s preferred gauge for tracking inflation showed a further cooling of price hikes. The government reported on Friday that its Personal Consumption Expenditures Price Index rose at an annual 5.5% rate in November, down from a 6.1% in October. Excluding food and energy prices, prices rose at a 4.7% annual rate versus 5.0% in October.

U.S. companies continued to buy back shares at a slower pace for the third quarter in a row. In this year’s third quarter, share repurchases by companies in the S&P 500 totaled $210.8 billion, down 4% from the second quarter, according to S&P Dow Jones Indices. Relative to the third quarter of 2021, buybacks were down 10%.

Looking ahead to 2023, many Wall Street analysts have a positive view of three equity sectors: energy, communication services, and information technology. Those were the sectors that had the highest percentages of “buy” ratings from analysts, as of December 19, according to FactSet. Those with the lowest percentages of buy ratings: consumer staples, financials, and materials.

The final week of 2022 will be a light one in terms of economic reports. However, a report on home prices will be released on Tuesday, followed by pending home sales on Wednesday and weekly data on unemployment claims on Thursday. In the following week, watch for the government’s monthly employment report to come out on Friday, January 6.

Source: John Hancock Investment Management

FY2023 Estimated Federal Tax Revenue

Out With the Old. In With the New.

Every new year brings new ways of doing things. Here are some of the trends and ideas that may shape 2023 (or not).

Challenging your taste buds. “Flavors that violate [consumers’] expectations are sure to be a hit…unexpected and unique flavor combinations will be in demand going into 2023.” Spoiler alert. If you want to be surprised by 2023’s new flavors stop reading here. If you want to warn your tongue what may be coming, prepare for dragon fruit and Vietnamese-Cajun.

Traveling for inner growth. One of the top travel trends in 2023 will be transformation retreats, according to Sarah Allard of Condé Nast Traveler. “…2023 will be the year we travel for personal betterment. Whether you are seeking to overcome grief, identify your life’s mission, or discover what your body is physically capable of, there will be a transformation retreat that caters to it.” Another anticipated trend is “set-jetting,” visiting countries where your favorite movies and television shows are filmed.

Dowsing for fresh water. 2023 may be the year that water-strapped cities and regions begin harvesting water vapor. That’s the suggestion offered by scientists at the University of Illinois at Urbana-Champaign who have been researching sources of fresh water. “A new study suggests an investment in new infrastructure capable of harvesting oceanic water vapor as a solution to limited supplies of fresh water in various locations around the world,” reported Science Daily.

And now for something completely different. If you’re bored with your current exercise routine, you might consider the Ministry of Silly Walks workout. A tongue-in-cheek study published in the British Medical Journal found that inefficient walking (of the type seen in Monty Python’s Ministry of Silly Walks skit) burns lots of calories. “Adults could achieve 75 minutes of vigorous intensity physical activity per week by walking inefficiently for about 11 min/day. Had an initiative to promote inefficient movement been adopted in the early 1970s, we might now be living among a healthier society.”

We hope you have a safe and happy New Year celebration.