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Market Insight January 23, 2023

Here is the Market Insight for the week of January 23, 2023:
Breakaway 5

Large Layoffs Continue

What is it? 

Coming into this year, many companies were laying off thousands of employees. That trend has continued so far in January, “putting the state of the economy in question.”* 

“The trend of large-scale downsizing goes back several months as Facebook parent company Meta said in November that it would cut more than 11,000 employees and put a freeze on hiring in the first quarter of 2023.”*

Why does it matter?

The effects have broad implications, especially for technology, media, and financial companies. There have been hiring freezes or layoffs at Microsoft, Amazon, Google, Salesforce, Coinbase, Twitter, Goldman Sachs, Morgan Stanley, and Bank of America among others.*

“In the media sector, the Washington Post’s publisher told employees last month that there would be a single-digit percentage of cuts, which the New York Times reported is expected in early 2023. CNN and BuzzFeed also announced layoffs in December, and last week it was reported that NBC News and MSNBC would be making cuts as well.”*

This matters not only to the people being laid off, but to the market as a whole. The Federal reserve is still raising interest rates to bring inflation back to more sustainable levels. If they see the job market struggling, they could be less likely to keep interest rates high. Those interest rates impact market prices which we take into account as the Fed updates us on their monetary policy. 

Debt Ceiling Doom 

What is it? 

The $31.38 billion debt limit was reached by the federal government.* Because of that, the Treasury Department had to step in to avoid a debt default* 

“‘Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans and global financial stability,’ U.S. Treasury Secretary Janet Yellen wrote. Yellen said Treasury’s extraordinary measures will likely be exhausted by early June, putting pressure on lawmakers to find a debt ceiling resolution. The U.S. famously lost its AAA credit rating by S&P in early August 2011 amid a contentious debt ceiling debate that almost triggered a government shutdown.”**

Why does it matter?

“The S&P 500 (^GSPC) lost about 12% from early July 2011 through the end of August as investors voiced their concern on the country’s debt situation. Roubini says officials need to avoid a similar situation at all costs, especially as the U.S. economy contends with sluggish economic growth and stubbornly high inflation.”**

If the government did default on its debt, many investors and lenders would be hurt financially. Because of how much things would change if the government defaulted on the debt, we believe that congress will raise the debt ceiling when the time comes to do so. 

Other articles we found interesting this week:

Earnings estimates keep falling, which might be no problem for stocks

Davos 2023 BOJ’s Kuroda vows to keep ultra-loose policy

Crypto lender Genesis files for bankruptcy protection

Current 401(k) portfolio

Our last 401(k) portfolio reallocation: 5/19/2022. 

Want more information?

The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach. 

Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.

Click here for more details about our investment management 

Sources:

*Ronn Blitzer. “These major companies are laying off workers at a huge rate”. 1/19/2023. Fox Business. https://www.foxbusiness.com/economy/these-major-companies-laying-off-workers-huge-rate

**Brian Sozzi. “Roubini: U.S. debt ceiling fight is a potential ‘financial catastrophe’”. 1/19/2023. Yahoo Finance. https://finance.yahoo.com/news/roubini-us-debt-ceiling-fight-is-a-potential-financial-catastrophe-105938585.html

IMPORTANT DISCLOSURES: 

Educational use Only. The market update published by Breakaway Financial Group LLC (“Breakaway”) is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation. 

Advertising and Marketing. Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Breakaway is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice. 

Links to Third Party Content. This Market Update contains links to articles or other information maintained by unrelated third parties. You acknowledge and agree to the following: All such information is provided solely for convenience purposes only because we believe that it may provide useful content. and all users thereof should be guided accordingly. We disclaim any responsibility for the link’s performance or interaction with your computer, its security and privacy policies and practices, and any consequences that may result from visiting it.  We do not control the content published by the third-party; we do not guarantee any claims made on it, nor do we endorse its sponsor or any of the content, policies, activities, products or services offered by any advertiser on the site. Breakaway assumes no liability for any inaccuracies, errors or omissions in or from any data or other information provided by the third party and inclusion or reference by Breakaway to any third party link should not be construed by any consumer and/or prospective client as a solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. 

Important Information regarding Registration Breakaway Financial Group, LLC and/or Patrick Traverse offer investment advisory and financial planning services through Belpointe Asset Management, LLC, (“Belpointe”) 500 Damonte Ranch, Parkway Building 700, Unit 700, Reno, NV 89521, an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe offers, or that its personnel possess a particular level of skill, expertise or training. It is important to read disclosures pertaining to Belpointe Asset Management at this link https://belpointeasset.com/disclosure/.  Additional information about Belpointe and Patrick Traverse is available on the SEC’s website at www.adviserinfo.sec.gov.

Craig Stahlecker

Craig Stahlecker

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IMPORTANT DISCLOSURES:
The information provided is intended to be educational in nature and is not intended to be a recommendation for any specific investment product, strategy, plan feature or other purposes. Accordingly, it should not be construed by any consumer and/or prospective client as solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation.

Communications such as this are not impartial and are provided in connection with advertising and marketing. This material is not suggesting a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, insurance, legal or tax professional that takes into account all of the particular facts and circumstances of an investor’s own situation. No person associated with Money Coach is a licensed attorney or tax professional and the information contained herein should not be considered tax or legal advice.