Fed Hikes Slow, Tone Remains Mixed 

The Federal Reserve once again raised the key federal funds rate by the widely expected 0.5%, increasing the target to a range between 4.25% and 4.5%, a 15-year high. The consensus of committee governors penciled in a peak range of 5% to 5.5% by the end of 2023, which was a fairly substantial increase over the 4.6% median target released just a few months ago in September. The committee also sees inflation staying higher for longer, with core inflation falling to 3.5% by the end of next year, versus the 3% target revealed at its last meeting.  

Fed officials made little changes to their forward-looking statement and in his press conference, Chairman Powell continued to articulate the committee’s resolve in getting inflation under control. That said, he did admit that a slower pace of rate increases makes sense moving forward but did not commit to specifics beyond that. Stocks initially moved lower when the hike news and statement were released but turned around during Chairman Powell’s speech as he signaled a shallower trajectory as the economy reaches “stall speed.” Officials also predicted unemployment to rise sharply in the next year and remain elevated in 2024 and 2025, a sign that their actions will take a toll on American workers. 

Three Things                               

Silicon-Battery Startup Gets Boost From MSFT, Government, Others 

Washington-based Group14 Technologies says that its silicon anode material is far more efficient than commonly-used graphite technology. The silicon technology is also reportedly able to recharge faster, which has been a common sticking point for electric vehicle buyers. Group14 already has a factory in Washington State and has raised hundreds of millions from investors, including Porsche AG, and a joint venture between BlackRock, Inc. and Singapore’s Temasek Holdings. More recently, the company was granted $100 million from the U.S. Energy Department and raised an additional $214 million from Microsoft’s Climate Innovation Fund, Lightrock Climate Impact Fund and others. The capital is expected to fund additional factories in the U.S. and South Korea. Group14’s silicon-based batteries can be easily used alongside graphite batteries, allowing for easy integration.  

Market Volatility is Benefiting This Investment Strategy 

In the years before the pandemic, quant investment strategies, which generally profit from erratic, volatile stock markets, lost much of their luster — their fortunes have shifted in 2022. These algorithms are developed to capitalize on panic and/or euphoria using complex triggers and can also exacerbate the swings as funds move quickly in and out of stocks or indexes. With growing economic uncertainty and investor jitters, these specialized funds have actually become a perceived “safe haven” as investors seek “crisis alpha.” The SG CTA Index, which tracks the 20 largest quant/algorithmic strategies, is up 19% in 2022 and on pace for its best year since launching in 2000. That said, would-be quant investors should do their homework as these types of strategies carry unique risks.  

Apple Sells Just 24% of iPhones in the States 

A new report from CIRP (Consumer Intelligence Research Partners) revealed that despite its catchy advertising, busy stores and digital presence, Apple accounts for less than a quarter of total iPhone sales domestically. The most popular channel for purchasing the popular smartphones is through a wireless carrier such as T-Mobile, Verizon or AT&T. In fact, wireless providers captured 67% of all iPhone sales over the last year. Their success can be attributed in part by aggressive advertising, often offering a “free phone” or “buy one, get one” if you transfer service — but always read the fine print, as these “too good to be true” offerings often come with monetary or time commitments on the back end. And in case you were wondering, just 5% of sales came from big-box stores such as Walmart, Target and Best Buy.  

In the Know                               

Rating Fed Chiefs 

Wielding tremendous monetary power, the Federal Reserve can greatly impact our economy, stock and bond markets. Its ability to print money, alter interest rates and even bail out mega-institutions may make this entity more powerful than the president when it comes to the stock market in particular. The Fed Chair leads the Federal Open Market Committee and is often held responsible for its actions. Since its inception in 1914, the Fed has had just 16 Chairs, and each has had their own unique impact on stock markets. The three best Fed Chairs for stock market (using annualized, inflation-adjusted returns) performance are: 

1. Daniel R. Crissinger (1923-1927): 17.2% 
2. Janet Yellen (2014-2018): 11.9% 
3. Paul Volcker (1979-1987): 9.3% 

But stocks don’t always rise, and the three worst Fed Chairs for stocks were:  

1. William P.G. Harding (1916-1922): -5.6% 
2. Arthur F. Burns (1970-1978): -5.6% 
3. Eugene Meyer (1930-1933): -26.1%