Stocks: Bouncy or Bubbly?
Forwarded this email by a friend? Subscribe here.
While Hollywood gazed into the crystal ball this week to predict Golden Globe winners, financial analysts were busy forecasting what the latest Labor Department numbers mean for the economy in the months ahead. A Goldilocks job report showed that 2022 was a near-record year for job growth, and the unemployment rate fell to 3.5% — matching a five-decade low. But wage growth also cooled in December, suggesting that inflation may have peaked — and that has experts predicting that the Fed may start slowing down its rate hikes. This morning, we got confirmation that inflation is indeed slowing, declining for a sixth straight month after June’s peak, while the consumer price index rose 6.5% in December. This is well below June’s report of 9.1%.
With several big banks kicking off earnings season tomorrow (including JPMorgan, Bank of America, Wells Fargo, and Citigroup), we should get some more clues as to the state of the economy. While more experts are suggesting that we may be able to avert a major recession this year, there are still plenty of reasons for investors to stay cautious, particularly when so many are lowering their growth forecasts in 2023. Below, we have some ideas on how to navigate the stock market in this moment of uncertainty.
Finally, we’d be remiss not to mention all of this week’s climate news. A new report shows that US greenhouse gas emissions were up 1.3% in 2022, indicating that we still have much progress to make on decarbonization. Meanwhile, California residents are experiencing torrential rain that scientists blame partly on our changing climate. But it’s not all doom and gloom. We were thrilled to see the new UN report announcing that our efforts to save the ozone layer are working. It’s further proof that collective action to impede an environmental crisis can work, and if that’s not a reason for optimism, we don’t know what is.
News you can use
- Bank of America, NVIDIA, Microsoft, Accenture, and Truist are America’s Most JUST Companies this year, says JUST Capital. Verizon, Hewlett Packard Enterprise, Apple, Intel, and JPMorgan Chase rounded out the top 10. The independent nonprofit, which we think should be part of every FWIW reader's suite of research tools, asks Americans what matters most when it comes to business behavior and measures how companies perform on those issues. Fair wages, job creation, and ethical leadership topped this year’s poll. Check out the complete list of company rankings.
- What will future gizmos look like on a warming planet? CES 2023 was chock-full of examples. A robot to precisely fertilize seeds from John Deere, a bioengineered “air purifier” houseplant from startup Neoplants, solid-state battery cells from Mercedes Benz-backed Factorial Energy, sustainable-material tires from Goodyear, and many electric vehicles (including a color-changing sedan from BMW) were among the innovations showcased. Looking for new ideas and companies to watch as you think long-term? Read more about environmental tech innovations featured at CES.
- A bunch of new ESG funds are in the works for 2023, including one from the famed activist investor that took on Big Oil and won. Engine No. 1 has filed paperwork for the new Transform Scarcity ETF that will invest in food, agriculture, water, land companies focusing on sustainability and transforming scarce resources. A climate action equity ETF from Xtrackers will track the MSCI USA Climate Action Index. The Global X Carbon Credits Strategy ETF will track carbon credit futures.