🍱The Fed shocks the market🍟

🏋️Markets in turmoil 🗽

Equity markets generally decline after the Fed meeting. The aggressive rate hike and indication of balance sheet reduction is a surprise for many investors as intense discussion made investors uncomfortable on the equity outlook. All major indices took a beating. Pika World russell 2000 which is a small cap growth stocks declined sharply too and our portfolio has been weighed down considerably as we made a position on recovery .

In view of an inflation fight Fed, Pika World will now take major loss on key positions of growth stocks as we make more transition to some defensive sectors. 

🛎Supply Chain Joy🚖

The ISM index fell to 58.7, a missed of 60 and a fall from 61.1 previously. Yet, despite a weaker showing, there is a glow in the report. Let’s get into the details. 

First, we are seeing a weakening of supply chain constraints. If supply chains are getting better, companies will face lesser price pressure. Consumers benefit too with a lower price hike for products and goods, leading to slower inflation. 

Moreover, we see the price paid index drop drastically from 82.4 to 68.2. This also adds to the good news of a fall in supplier delivery time. It, therefore, help to reassure investors that perhaps the Fed needs not to be too aggressive on its rate hike expectation. 

➡️Labor data coincides with a brightening outlook💡

If we look at the November jobs opening data, it does paint the same picture. First, the jobs opening stood at 10.6 million, below the expectation of 11.1 million. This comes as about 4.5 million Americans left their jobs. 

The few job openings also imply that businesses are in the hot chase for workers, which can help reduce the wage increase and ultimately slow inflation in the market. 

💣Bond Yield hurting Nasdaq🧸

Pika World had observed that the bond yield is resuming its upwards trajectory and hit 1.66% at one point. It seems to be moving towards its prior peak of 1.75%. Higher yield usually reflects a higher inflation expectation for the future and bodes poorly for tech stocks expecting profits way further into the future. 

We hope you enjoy this read. Pika World will be right with you for the next hotcake update!

Cheers, 

Pika Nat.