Good news is starting to actually be treated like good news again, but slowly. We jump into a discussion about the main news that impacted all of 2023 and what the reactions were to that news and why they were a little different than you'd expect.
Good news is starting to actually be treated like good news again, but slowly. We jump into a discussion about the main news that impacted all of 2023 and what the reactions were to that news and why they were a little different than you'd expect.
Thanks for listening!
Eddie Thomas:
Hey guys, what is going on? Welcome to another episode of the modern outlook Podcast. I'm Eddie Thomas, your host. And this is brought to you by wealth management services in Hershey, Pennsylvania. And it's been a while, it's been a really long time. Actually, it's been since about July, that we've had an episode come out here. But that changes, we're jumping right back into it the end of the year. And we are jumping right back into it to go into 2024. So let's just go. And what's today's episode about today's episode, you'll see it in the title. But it's the fact that good news is finally kind of becoming good news again. And it's funny because for quite a while 2022 into 2023, felt like there was no real escape, there was bad news come out, the market would react poorly, there was good news to come out of the market react poorly. And we were just kind of in this wishy washy period where there's really no news that could come out that everyone was excited about, at least that everyone was on the same page about. And that's finally starting to change, you're wrapping up in the second half of 23 to ending 23. And why is that happening? Well, it's a lot to do with the Fed. But it's a lot to do with the data that we're seeing. And it's a lot to do what exactly the messaging is. And when you take a look, again, haven't ran one of these since July. And really what's happened since July, is the market was doing really well. middle of August to the end of October, we've had a really bad rough, rough patch. And then you go into the beginning of November to now recording this just a couple of days before Christmas, and kind of back up and running. And things have been really, really good. But the reason that's happened, the reason for that change is because the news that we knew has been news been good the entire time, is finally started to be seen as actually good news. And there's been three things through the entire time all throughout the year, unemployment has been low, consumers been out spending money like crazy. And there's help wanted signs everywhere. And jobs available, no matter who wants one. So when you take a look at that, typically, that's always always a good thing. Except for this year, when everyone was worried about inflation and interest rates and what the Feds going to do when well, how does that impact the market and economy? And those questions were kind of swirling, and we are finding ourselves with every single unemployment reading being lower than the last for quite a bit there. People reacting negatively. And it's not often that you see unemployment go from 3.8% to 3.7%. And the market go down on that news. But that's exactly what we were seeing. And you'd have data come out that consumers are still spending a ton of money, and the market would go down. Because that's not what people wanted to see. And there'd be more jobs available for people in the market would go down. Because that's not what people wanted to see. And the question was, why don't we want to see that every other time in history, that's exactly what we want to see. But 2023 was different. And for a while when you saw all three of those data points, anybody looking at the long term health of the economy, you know, that's a really good thing. You know, it's better when people have jobs, you know, it's better when there's jobs available, you know, it's better when people are spending money. But in the short term when you're trying to bring down inflation, and when the Fed raise interest rates to a point we haven't seen in a really long time. And you just want to see in the Fed wants to see a softening of that economic data. That's why the market was reacting negatively. People wanted to see the unemployment tick up a little bit, people wanted to see consumer spend less people wanted to see less help wanted signs. And the only reason being, if you got that data, it was quicker for the Fed to say, Okay, we're bringing down inflation, we're comfortable, where we're at, we're not going to raise interest rates and in turn will start to cut interest rates. And was for the entirety of the year that people were waiting on that and waiting on that and waiting on that. And every time I did it came out it was okay. What does it mean? What's the Fed gonna say? And when in the middle of August, when the Fed came out and said, Hey, we see all of this data out there. What we're going to do is potentially keep interest rates higher for longer because of that economic data. And the strength we're seeing people panicked and sold off. Because what if that leads to a recession? What if higher interest rates pushes unemployment too high? What if there's no jobs available for people? What if people stopped spending money? What if we move the economy in the wrong direction? And so people were worried. And you saw that in the market returns for those two and a half months? But what changed? Why is good news. Finally, good news again. Well, good news is good news again, and low unemployment and higher consumer spending and help wanted signs are good news again, because the Fed said so because the Fed came out beginning of November, November 1. and said, Hey, we still see that same data, but we're comfortable with it. And we're gonna pause raising interest rates for now, we think we've done enough. And they kept this somewhat on the fence, they said, Hey, going forward, we're still going to monitor it, we'll still see where we're at. But for right now we're pausing. And everyone kind of sat on that and waited, it's exactly what we wanted to hear. So the market had a really good November. And then you come into December, and people wait to hear from them again. And then the December meeting was even better than November. And the December, messaging from the Fed was, hey, we're gonna keep interest rates where they're at, given where the economic data is. And then next year, we're going to project to cut three times. And who knows when those cuts are going to happen, we'll see going into 24 what that looks like. But it's phenomenal. So low unemployment, so people spending money, so help wanted signs, it's all seen as a good thing, again, because the Fed isn't gonna raise interest rates, and they're gonna start lowering interest rates next year, the second that came out, and that's what they said, that good news can finally be good news again. And again, it's going to be a slow process, it's going to be one of those things that we still till that data, if it gets a little too strong, and people are spending too much if unemployment is too low, if there's too many jobs available, the Feds gonna have to kind of step in again, and we'll see what consumer sentiment and investor sentiment is. But for right now, going into the end of the year, and the rally that we've seen since November 1, is based on the fact that those three data points are incredibly positive. And the Fed has responded exactly how we all want to see them respond. And they've taken a lot of fear out of the way. They've taken a lot of fear of recession and a lot of fear of, of what's the economy going to do and what's interest rates going to do. And they're starting to kind of remove that slowly. And they can't do it all at once, because it'd be too much of a shock of positive news into the system. So they have to do it slowly. But we're in really good shape with that data. And so that good news is finally finally being seen as exactly that. And we'll see it the last couple days here in the year, kind of have in store for us. And we'll see what next year looks like. And we'll have an episode kind of recap and all that going into next year and what we're looking at and why we're looking at it and what we're hoping for. But for right now, I kind of wanted to come out and just talk about what we've seen really since July to now and why we had that eight week sell off and why we're seeing that big rebound and what exactly is happening in the headlines and how are people reacting to it. So quick one back, wanted to sit down and talk about that. If you want to see this in a more of a written type of format, the blogs on the website, your wm.com Check out all the blogs we have there and this is one of them. But I like coming on here and talking about it too. So until next time, and it won't be a six month layoff this time it's going to be much much sooner before the next episode comes out here but until then, stay happy stay healthy, and I'll see you Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at anytime based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.