Money

The “goldilocks” economy is hitting stock portfolios

Published

3 months ago

September 11, 2023

ticker NEWS

In recent weeks, the elusive “Goldilocks economy” has made a return to the financial spotlight, leaving investors curious about its implications for their stock portfolios.

This term, coined decades ago, characterizes an ideal economic scenario – one that’s neither too hot nor too cold but just right. It aims to strike the perfect balance between growth and inflation to keep the bears of economic downturn at bay.

However, this renewed optimism has proven short-lived as stocks have struggled throughout the month of August. The S&P 500’s disappointing performance in August marked its worst month since February, raising questions about the validity of the Goldilocks narrative.

Bearing market

The return of bearish sentiment can be attributed, in part, to market psychology. In 1992, Salomon Brothers’ David Shulman defined a Goldilocks economy as one with 4% annualized growth and 3.2% year-over-year inflation. While we’re not quite there, recent economic indicators suggest we’re closer to this Goldilocks scenario than initially thought.

Earlier in the year, pessimism prevailed with expectations of a looming recession, driven by fears of Federal Reserve rate hikes and various global concerns. Fed Chairman Jerome Powell warned that rate hikes could lead to economic pain, with sticky inflation necessitating higher unemployment and potentially a recession.

Inflation dropping

However, recent data paints a different picture. Inflation has steadily decreased from its peak in June 2022, while GDP has continued to grow at 2.5%, surpassing most expectations. Job growth remains steady, unemployment rates are down, and the labor participation rate is up – all positive indicators.

This aligns with the view that there is no recession on the horizon, but rather modest, consistent growth with inflation stabilizing, creating a Goldilocks-like environment. The stock market has quietly thrived in this scenario, despite the persistent bearish sentiment.

Nonetheless, the fact that we’re once again discussing a Goldilocks economy ushers in a new psychological phase in this 11-month-old bull market. After being wrong for so long, it’s easy for investors to be jolted back to disbelief and panic when faced with any hint of risk.

Money

Tech giants drive global mega-cap surge amid inflation relief

Published

1 day ago

December 1, 2023

ticker NEWS

Tech giants have taken the lead in propelling global mega-cap stocks to new heights.

This surge comes as a welcome relief for investors who have been closely monitoring the impact of rising inflation on the financial markets.

The tech sector, including giants like Apple, Amazon, and Microsoft, has been instrumental in driving the rally. These companies have reported robust earnings and strong growth prospects, which has boosted investor confidence. As a result, the market capitalization of these tech behemoths has reached unprecedented levels, contributing significantly to the overall rise in global mega-cap stocks.

The easing of inflationary pressures has played a pivotal role in this resurgence. Central banks’ efforts to tame inflation through monetary policy adjustments have begun to bear fruit, reassuring investors and stabilizing financial markets. As concerns over rapidly increasing prices recede, investors have become more willing to invest in mega-cap stocks, particularly in the tech sector, which has demonstrated resilience in the face of economic challenges.

Will the tech giants maintain their momentum and continue to lead the mega-cap surge, or are there potential risks on the horizon?

Money

Real reason bosses want employers back in the office

Published

3 days ago

November 30, 2023

ticker NEWS

As the world gradually recovers from the pandemic, employers are increasingly pushing for their staff to return to the office after years of remote work.

The driving force behind this push is the sharp decline in commercial property values, which has left many businesses concerned about their real estate investments.

Commercial property values have plunged in the wake of the pandemic, with many companies downsizing or reconsidering their office space needs.

This has put pressure on employers to reevaluate their remote work policies and encourage employees to return to the office. #featured

Money

Businesses cash in on Black Friday sales

Published

3 days ago

November 30, 2023

ticker NEWS

Black Friday, the annual shopping frenzy, has become a global phenomenon rooted in economic strategies.

Retailers deploy various tactics to lure consumers, creating a win-win scenario for both shoppers and businesses.

The concept of Black Friday traces its roots to the United States, where it marks the beginning of the holiday shopping season. Retailers offer significant discounts on a wide range of products to attract a massive customer influx. This strategy, known as loss leader pricing, involves selling a few products at a loss to entice customers into stores, hoping they will buy other items at regular prices.

Retailers also employ the scarcity principle by advertising limited-time offers and doorbuster deals. This sense of urgency compels consumers to make quick decisions, boosting sales.

Furthermore, online shopping has revolutionized Black Friday economics. E-commerce giants use data analytics to customize deals, targeting individual preferences. Cyber Monday, the digital counterpart to Black Friday, capitalizes on the convenience of online shopping. #featured