During my last trip to New Zealand to visit my daughter and her family, the first thing my young granddaughter asked: “Can you play Legos with me?”. There were no rules. We just had fun, admired each other’s creations, and told stories about what we were doing. It was a great day – being together, being creative – and doing something companionable. Girls with Legos are making the news; recently three middle—school girl scouts1made headlines in their home state of Texas by winning the state Lego championship. It appears that the tipping point for the top two teams was the girl’s ability to work together (aka teamwork).
Sadly, we don’t have any Legos in the White Raven Financial2 office; maybe we should. In the office, Brett3 and I (Diane4) consider ourselves a team. We have discussions about being fiduciaries and general financial planning. Sometimes our conversations are on how to be innovative and adapt to each client personal needs – working on alternatives when putting together a plan that will meet an individual and/or a particular family’s goals. Both of us provide these solutions and even though we sometimes differ in our thoughts, we work together to provide the best strategy for the client. Similar to a good Lego project, a good financial foundation helps to provide a successful end product.
We’ve heard the news! Inflation rose to 7% in December was reported as the fastest rate since 19825. I don’t think that is the type of building of our economy that one would call helpful. In addition to high inflation, it appears that we still have the looming challenges of the omicron variant, worker shortages, and a seemingly hawkish Fed. Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, in a recent market commentary6, commented that even though the Federal Open Market Committee (FOMC) did not state the pace of rate hikes, she felt that four of them are priced in by the markets. During his January 26th press conference7, Fed Chair Jerome Powell noted that as forecasters, they did expect inflation to decline over the course of the year. On a side note, in addition to the reading of many 2022 outlooks, we also read interesting articles on how to meet the Net-Zero Challenge7. The challenge aims to achieve net-zero greenhouse gas emissions by 2050 or sooner. We found that the cost in wind and solar power technologies have fallen about 85% in the past 10 years according to a recent article by Abrdn9 – no inflation there.
In the U.S. or overseas, technology drives the way we live. If you followed the link on the article in the first paragraph about the girl scouts, you may have noticed that their submission included a robot. Thornburg Investments, in their 2022 Outlook10, noted how leapfrogging technologies and increased economic formalization are helping to reshape emerging economies. State Street Investors, in their Global Market Outlook – Continuing the Climb11, felt that earnings growth in Europe will outstrip the U.S. due to their attractive valuations. Lazard Asset Management12 seemed to echo the previous sentiment on their thoughts that the economic environment of the region is improving. Maybe it is due to the Net-Zero initiative; Germany is proposing a bold new proposal13 to dramatically increase wind power in the country by 2030.
The markets in January were like a fast down-hill toboggan run of my youth – the track did go down but had bumps, a few twists and was definitely scary on the landing. The blue-chip barometer (the Dow)* started down but jumped the track early and posted a -3.32% drop. The S&P 500 (SPY)* rode the track to the finish with a drop of -5.26%. The tech-rich Nasdaq Composite (COMPTR)* found the track icy, then picked up speed resulting in a -8.98% decline. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab).On Tuesday, January 25th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller15 report. The report showed that for the reporting month that although home prices continue to increase – growth is continuing to slow. The November 20-city composite Home Price Index15 reported a 18.3% year-over-year gain; down 0.2% from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of November showing a 1.0% increase over the prior month of October for the 20-city composite index.
Regards and thank you (as always) for reading,
The Team at White Raven Financial
Advisory services offered through White Raven Financial Services, Inc. a Registered Investment Advisor in the State of Washington.
*Indexes are unmanaged and do not reflect service fees, commissions, or taxes. You cannot invest directly in an index. Past performance is not necessarily indicative of future results. Returns for the DOW, S&P 500 and the NASDAQ are the total return (price only) provided by Morningstar as January 31, 2022. Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment loss.
*The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.
*The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues.
*The NASDAQ is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks.
- * https://Morningstar.com (index)