January 5, 2023, 8:02 pm EST
Strong Private Job Report
Sometimes, good news may not good news. The strong private job ADP report for December 2022 with 235K jobs indicated a solid number. However, it is not good news for the stock market as major indexes are down more than -1% today.
Fed reserve may feel the pressure for its goal to control inflation. When inflation remains high for a long period of time, the economy will be hurt deeper. It will take a longer time to recover. There is no perfect solution to solve the inflation issue when it is out of control. Either sharp-and short pain or less severe and long pain is available. Fed may want to take the easy one but may be forced to toggle in between. After all, they do not want to be blamed for causing the recession with high-speed rate hikes.
In our opinion, the recession is unavoidable.
Meantime, there are still some large-cap stocks making new highs: LW, JNJ, BA, MRK, and CAG.
But, there will be few winners in the bear market. Therefore, it is important to make sure only the strongest stocks can exist in your portfolio.
Although job markets are still strong, they will go down along with rising rates and inflation pressure.