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Market Update 20230206 at 10am

Market Update 20230206 at 10am

February 06, 2023

After a very difficult 2022, 2023 is certainly starting out on a much more positive note. All the major averages reside above their short, intermediate, and long-term trend lines. It has been over a year since all three have traded above their 200-day moving average. So, from a technical standpoint, there is reason for optimism. Further, there is a rotation underway from value to growth as many of last year’s positive performers are lagging and many of last year’s laggards are beginning to lead again. Now let me say that one month does not necessarily mean we are out of the woods yet, but it is certainly a start.

Now let’s look at some statistics particularly the PCE Core Inflation picture. The US Core Personal Consumption Expenditures (PCE) Inflation is a measure of inflation in the United States that is calculated by the Bureau of Economic Analysis (BEA) and is based on data from the National Income and Product Accounts (NIPA). The Core PCE Inflation specifically measures the changes in the prices of goods and services purchased by consumers, excluding volatile components such as food and energy prices. It is considered a key measure of inflation by the Federal Reserve, as it provides a more comprehensive view of underlying inflation trends in the economy. The Fed uses the Core PCE Inflation to monitor inflation and make monetary policy decisions.

As you can see from this chart US Core PCE Inflation YOY appears to be rolling over. If this trend continues, it should give the Federal Reserve the leeway to slow or even pause future rate hikes.


And unemployment continues to trend lower.


Jobless claims continue to decline.


And despite the announced job cuts at various big tech companies, their respective stock prices have generally rallied and rallied nicely.



Consumer sentiment appears to be coming off its lows.



So, despite the talk of an impending recession and a potential hard landing, in my mind it is hard to imagine a deep recession when the economy appears to be operating near full employment and the consumer is beginning to turn more positive. Bottom line, 2023 is starting out far better than 2022. We still have a long way to go, but I do like these early signs of potentially more positive things to come.

In the meantime, would love to hear some of your comments about the Chinese Weather balloon.


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