A Strong Finish to 2021 – Volatility Coming – Closing Bull Jan. 7th, 2022
Quick Summary:
In the news this week, we’ll be discussing the Labor Department reporting that the U.S. economy added far fewer jobs than expected, Inflation anxiety strikes at the central bank’s meeting, chaos breaks out in Kazakhstan, and interesting facts for the week.
Let’s get into the news!
Key News This Week:
Market recap and system update
The U.S. economy adds fewer jobs than expected
Inflation anxiety at the meeting for the Central Bank
Chaos in Kazakhstan
Interesting facts
Read the Transcript
Happy New year one and all and welcome to my financial markets’ re-cap for the week.
Before we get to the news, a quick update on the system. We had a strong finish to 2021 and I am looking to have yet another great year in the markets.
In this first week, we pulled a small profit out of the market for the collective portfolio of the S&P 500 and the Nasdaq 100.
We were expecting the market to sell off in January, and that is exactly what is happening so far.
We will be sitting this volatility out for a week or two as we expect more weakness to come.
We can of course be wrong, but we need to follow our system, and it’s saying there is a much higher probability of a new swing low than a new high in the indexes before the end of the month.
If we are right, it will create some great trading opportunities towards the end of the month. So, let’s hope we are right!
So that was the system update, now what happened in the news this week?
Today the Labor Department reported the U.S. economy added far fewer jobs in December than expected. The nonfarm payrolls report showed an increase of 199,000 in December, with economists expecting 422,000, so well short of analysts’ expectations causing the market to drop and stay down today.
The big drop this week actually happened on Wednesday when the Federal Reserve released its minutes from the meeting last month.
In the notes, it pointed to how Inflation anxiety was prominent at the central bank’s meeting, and officials signaled they could hike interest rates “sooner or at a faster pace” than previously expected to cool down prices.
On this news, the tech-filled Nasdaq lost a whopping 3.3% that day, a huge drop by index standards.
Whether they will or not be aggressive in raising rates will depend on the inflation reports between here and March, but it sure spooked the market.
Lastly, some news out of Kazakhstan this week. Tens of thousands of people, some reported to be carrying clubs and shields, have taken to the streets in recent days in the worst violent and deadly protests the country has seen since gaining independence from the Soviet Union three decades ago.
The demonstrations began over the removal of a price cap for fuel resulting in the doubling of prices for gasoline, but it also seems to reflect a wider discontent in the country, which has been under the rule of the same party since independence.
This is a country that is about 4x the size of Texas. A country that has vast natural resources, including gas, oil, coal, and minerals, making it an important area for energy giants like ExxonMobil, Shell, and Chevron.
And there’s a crypto angle: Believe it or not, Kazakhstan is the second-largest country for bitcoin mining after the US, but because of an internet shutdown this week, a big chunk of the global bitcoin network’s computing power has been knocked offline. Could this be part of the reason Bitcoin took a drubbing again this week? Maybe.
In a concession, the Kazakh government on Thursday announced a 180-day price cap on vehicle fuel and a moratorium on utility rate increases. It was unclear what effect the moves would have for the under-pressure government there.
Not to make light of a terrible situation, but I imagine things would kick off anywhere they double the price of Gas!
Lastly, here’s a couple of interesting facts:
The S&P 500 notched 70 closing highs last year, the most recorded in a single year since 1995.
Japan’s Toyota dethroned GM as the No. 1 automaker in the US in 2021, marking the first time on record that a foreign car manufacturer has topped the list.
That’s it from me, It’s Friday, time to down tools, thanks for watching, and bye for now.