Chart Attack!

December 10, 2023

Except for all the employment reports, it was a fairly quiet week. I'll be brief so you can get back to your holiday shopping! Don't forget to visit our website for additional information!

Stocks, Bonds, Bills, Oh My!

U.S. stocks inched higher this week. However, almost everything else retreated as you can see here:

But we're still looking good year-to-date!

While interest rates have backed off recently, fixed-income investments still offer inflation-beating yields.

Download the market update for a more complete review of last week's action.

Several companies are reporting quarterly results this week. Three I'm keeping an eye on are Oracle, Adobe, and Costco. Costco, in particular, should give us a good read on the consumer as the year draws to a close.

Michael Mauboussin is one of the best investment thinkers and educators today. Enjoy this relatively brief podcast on the topic: Why do companies die?

Take Five

One of the many reasons I enjoy the Christmas season is the beautiful music. Here is one of my favorite carols.

The Dismal Science

The big news this past week was employment. Several reports including JOLTS, ADP, and Friday's BLS employment report, didn't move the needle much on the economic outlook, in my view. Here are a couple of our posts with all the details.

Quite A JOLT!

The Department of Labor’s latest JOLTS (Job Openings and Labor Turnover Survey) report turned out to be much worse than expected when it was reported yesterday. The number of openings fell by more than 600,000 and prior numbers were revised downward as well. ZeroHedge does a good job summarizing

Under A Buttonwood TreeChris Ely

Good News on Jobs?

The official numbers for November were out this past Friday, December 8. The gain of 199,000, a bit better than most had expected. However, after downward adjustments to the prior two months and recognizing that workers returning from the auto strike boosted November’s gains, it’s fair to say the

Under A Buttonwood TreeChris Ely

Get ready for inflation week with both the CPI and PPI being reported on Tuesday and Wednesday, respectively. The Fed Board of Governors meets for the final time this year. The betting is no change in the discount rate when the Fed makes its announcement on Tuesday afternoon.

Here's Truflation's latest read on inflation:

The Cleveland Fed's inflation "nowcast" shows similar trends. Note: Headline CPI is expected to fall in November thanks to falling energy prices. However core CPI remains close to 4% and like the graph above remains stuck in a range well above the Fed's 2% target.

For those of you hoping the Fed will cut rates, be careful what you wish for - from Callum Thomas' ChartStorm:

This chart maps the path of stocks vs bonds when the Fed pivoted to rate cuts. Typically it sends the stock/bond ratio lower, conceptually this makes sense: lower rates are good for bonds, and lower rates are often in response to weaker growth (bad for earnings, sentiment: stocks lower). From an asset allocation perspective if you believe the Fed will pivot to rate cuts then the historical probabilities favor underweighting stocks, overweighting bonds.

Finally, here is Capital Spectator's survey of 4th quarter GDP nowcasts, averaging 1.2% with one month left in the quarter.

Topics in Personal Finance

The rise of interest rates has given retirees a lot more flexibility in managing their finances. This article from Barron's magazine offers a few ideas.

3 Moves That Retirees Can Make Now to Benefit From Higher Rates

Higher interest rates are here to stay. How retirees should respond.

BarronsElizabeth O’Brien

Also from Barron's is this article on last-minute ways to save on 2023 taxes.

It Isn’t Too Late to Reduce Your 2023 Tax Bill. Consider These 6 Steps.

Thanks to an inflation adjustment to the 2024 income-tax bracket thresholds, you may save money by deferring year-end income and bonuses to next year.

BarronsKaren Hube

Gold has been on a roll lately. While I don't object to holding some gold in your portfolio as a crisis hedge, it is not a great long-term investment when compared to stocks. Specifically, when you include dividends, stocks are the hands-down winner despite periods of significant outperformance by gold.

The podcast embedded in this post is well worth the time. It is a conversation, between Howard Marks, Chairman of Oaktree Capital, and Annie Duke, author of Thinking In Bets, discussing risk.

Thinking About Risk

Investors have to make decisions in an environment of uncertainty or risk. Understanding risk and its place in decision-making is key to long-term success. The Insights: Conversations recent podcast of a discussion with Annie Duke, the author of Thinking In Bets, and Howard Marks, Co-Chairman and Founder of Oaktree Capital,

Under A Buttonwood TreeChris Ely

And Finally,

Poor Charlie’s Almanac

In the December 3 Chart Attack! I mentioned Charlie Munger’s passing and suggested you get a hold of his Poor Charlie’s Almanac. There is a new edition just out this week. You’ll find it in our bookstore - here’s the link. Of course, it’s on sale just about everywhere books

Under A Buttonwood TreeChris Ely

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