Powell Surprises; Omicron Concerns

December 6, 2021

Stocks took investors on a wild ride last week as the Omicron variant and Fed comments upended market expectations.

The Dow Jones Industrial Average fell 0.91%, while the Standard & Poor’s 500 stumbled 1.22%. The Nasdaq Composite index dropped 2.62% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.62%.^1,2,3

A Tumultuous Week

Stock prices were volatile all week, swinging wildly after staging a modest recovery to begin the week. Omicron fears were not the only issue weighing on investors. Markets were also rattled by Fed Chair Powell’s Congressional testimony stating conditions warranted considering an acceleration of its bond purchase taper schedule. Last week’s roller-coaster action was epitomized on Wednesday when stocks rallied intraday by 520 points on the Dow Industrials, only to close the session lower by 460 points.⁴

Stocks staged a powerful rebound on Thursday on news that a second Omicron infection exhibited mild symptoms. Also helping the rebound was news that an agreement was reached in the House of Representatives to temporarily fund the government and word from President Biden that an economic lockdown was not in the plan to fight COVID this winter. Emblematic of the volatile week, stocks fell on Friday following a weak jobs report.

Powell Surprises Markets

Markets easily digested the Fed’s early-November announcement that it would pull the trigger on its bond purchase tapering program, but were caught off-guard by Powell’s comments during Congressional testimony last Tuesday. Powell indicated that the Fed would discuss the option of accelerating its tapering plans at its next meeting.⁵

Powell cited the risk of higher inflation and substantial improvement in the labor market as warranting ending bond purchases a few months sooner than planned. Powell sought to move away from describing inflation as transitory, acknowledging that rising energy prices, higher rents, and strong wage gains could keep inflation elevated, though he maintained inflation would decline sometime in 2022.⁵

This Week: Key Economic Data

Wednesday: JOLTS (Job Openings and Labor Turnover Survey).

Thursday: Jobless Claims.

Friday: CPI (Consumer Price Index). Consumer Sentiment.

^{Source: Econoday, December 3, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Coupa Software (COUP), MongoDB (MDB).

Tuesday: AutoZone, Inc. (AZO).

Wednesday: Gamestop Corp. (GME), UiPath, Inc. (PATH).

Thursday: lululemon athletica, inc. (LULU), Broadcom, Inc. (AVGO), Costco Wholesale Corporation (COST), Chewy (CHWY).

^{Source: Zacks, December 3, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

Register for Thursday 12/9 @11:30am

WEALTH WATCH:VANCE HOWARD ON FOX BUSINESS

Vance Howard joins Liz Claman on The Claman Countdown to discuss the recent volatility in the market. [Watch Full Interview]⁸ 

Register for Investing in a Volatile Market Webinar

^{This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice.} 

Passport Power

Did you know that if you owe the Internal Revenue Service $52,000 or more, the IRS can revoke your passport? That's right, the IRS has the power to revoke the passport of any taxpayer owing $52,000 or more, including penalties and interest.

Notably, if you’re currently paying off the debt or are contesting a tax bill in court, you should not be affected. However, anyone under an IRS tax lien could find their ability to travel hampered.

If you have any questions about tax debts or other complex tax issues, contact a qualified attorney or tax specialist.⁶

^{* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.}

Eat the Rainbow, Reap the Rainbow

Every food has its own health benefits, and colors can help you determine which health benefits you’re enjoying. Here’s a quick summary of some of the benefits associated with these colored foods:

• Red foods contain lycopene, which is a powerful antioxidant that can help reduce the risk of cancer and keep our heart healthy.
  
  
• Orange/yellow foods contain lots of carotenoids, which help maintain healthy mucous membranes and eyes/vision (possibly preventing cataracts and blindness).
  
  
• Green foods contain various compounds that have anti-cancer properties. They’re also an excellent source of folate.
  
  
• Blue/purple foods contain antioxidants called anthocyanins, which can help protect cells from damage and may reduce the risk of cancer, stroke, and heart disease.
  
  
• White foods are known for their antiviral and antibacterial properties, and some (like bananas) are a good source of potassium.⁷

Cranberry & Orange Buttermilk Breakfast Cake

Servings: 8-10

Time: 60 minutes

Ingredients 

• ½ cup unsalted butter, room temperature
• the zest from 1 orange zest
• 1 cup + 1 tablespoon sugar
• 1 egg, room temperature
• 1 tsp. vanilla
• 2 cups (256 g) flour
• 2 tsp. baking powder
• 1 tsp. kosher salt
• 2 cups fresh cranberries
• ½ cup buttermilk

Directions

1. Preheat oven to 350°F
2. Cream butter with orange zest and 1 cup if the sugar until light and fluffy.
3. Add the egg and vanilla and beat until combined. Meanwhile, toss the cranberries with 2 tablespoons of flour, then whisk together the remaining flour, baking powder and salt.
4. Add the flour mixture to the batter a little at a time, alternating with the buttermilk. Fold in the cranberries.
5. Grease a 9-inch square baking pan (or something similar) with butter or coat with non-stick spray. Spread batter into pan. Sprinkle batter with remaining tablespoon of sugar. Bake for 35 minutes, then check for doneness by touching the top gently or by inserting a toothpick. If necessary, return pan to oven, check every five minutes or so — it took my cake a little bit over 45 minutes to cook. (Note: Baking for as long as 50 minutes might be necessary, especially if you made the batter in advance.) Let cool at least 15 minutes before serving.⁹

Stay safe!

Footnotes and Sources

^{1. The Wall Street Journal, December 3, 2021}

^{2. The Wall Street Journal, December 3, 2021}

^{3. The Wall Street Journal, December 3, 2021}

^{4. The Wall Street Journal, December 1, 2021}

^{5. Reuters.com, November 30, 2021}

^{6. IRS.gov, May 25, 2021}

^{7. Nutrition Australia, June 24, 2021}

^{8. howardcm.com, December 2, 2021}

^{9. alexandracooks.com, December 16, 2011}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

^{Copyright 2021 FMG Suite.}

McCarthy Financial Group's Blog: Market Insights & Wealth Watch