Market Outlook

2022 Recap
2022 was a year full of challenges in the market and economy. Inflation was the number one story with record breaking numbers not seen in 40+ years. Government stimulus and low interest rates, which helped the economy in 2020-2021 created an inflationary problem that was not anticipated or dealt with properly by the Federal Reserve. The Federal Reserve was on a mission in 2022 to crush inflation by raising the Federal Funds Rate from 0.25% to 4.50%, which was the quickest ramp up in history. Ongoing supply chain issues compounded the inflation problem in large part due to China’s zero-Covid policy. War in Ukraine created additional global uncertainty. Energy costs spiraled upwards. Labor continues to be very strong with over 10M job openings, indicating there is continuing demand for workers. Housing remained hot in first half 2022 before finally dropping lower as higher interest rates cooled demand. 2022 ended up being the worst year on record for bonds and stocks didn’t fare much better. This was highly unusual for bonds and stocks to both be in negative territory in the same year. This has only occurred a couple of times in history.
2023 Current Market Conditions
As we enter into 2023, inflation measured by Core CPI (Housing, Apparel, Medical Care, Recreation, Education, and Communication) has been trending lower for six months. This indicates inflation is slowly abating, but remains well above the Federal Reserve’s 2% targeted rate. Therefore, we are coming closer to the “Fed Pivot”, where the Fed will start pausing the rate hikes and eventually cutting interest rates. There is now a risk of overtightening, keeping rates too high and for too long. The overall goal is to cool demand for goods and services.
What is on our radar for 2023:
The main question on everyone’s minds is focused on the Federal Reserve’s interest rate policy. How high and how long will the Fed keep interest rates at high levels? The higher and longer interest rates stay elevated, there becomes a stronger risk of a deep recession developing instead of the preferred soft landing.
· We are closely watching leading indicators such as: home sales, auto sales, employment / unemployment figures, and job openings / quits. These indicators provide insights into more real time trends, which allows us to make portfolio changes as needed.
· Earnings season is starting with corporations reporting their Q4 2022 and Full Year 2022 results over the next two months. We are tracking how companies performed and importantly their forward guidance expectations for 2023 and beyond.
· China is in the process of ending their zero-Covid lockdowns. Borders are being reopened and inbound travelers will no longer require quarantining. Manufacturing is being restarted and kicked into high gear. The government has relaxed restrictions on their large technology companies and has started to inject financing in their capital markets.
Ethan is a Financial Advisor, specializing in wealth management and strategic planning for families and businesses. Even prior to becoming a partner at Kubhera Enterprises, Ethan worked extensively developing financial plans, risk mitigation strategies, and managing assets for clients through UBS Financial Services, Inc. Hundreds of businesses and clients have benefited from his expertise and knowledge in pension consulting, retirement plan implementation, and tax efficient strategies.
A graduate of Rutgers University, and proud supporter of their sports programs, Ethan now resides in Robbinsville, New Jersey with his family. Ethan and his family are also deeply involved in community outreach programs and support local families in need.
Swamy is a serial entrepreneur with extensive experience in global markets with a focus on financial management and strategic consulting. Having founded and successfully managed several businesses for growth and merger to public and regional management consulting firms, Swamy is passionate in his consultative and intuitive approach to wealth management and risk mitigation. He brings experience from the business world to executives, business owners, and families alike for financial planning and wealth management.
A graduate in Electrical Engineering from VJTI, Bombay, Swamy now resides in Princeton, New Jersey with his family. Swamy and his family are deeply involved in various charities and giving back to the global community focusing on skills development for women and children in need.
Ganga is the principal at CPAs, Taxes and Associates, PC, a boutique CPA firm located in midtown NYC and with an office in Princeton NJ. His firm specializes in accounting, tax, and specialized audit services primarily in the professional services industry. His firm was established in 1990 and has seen consistent and significant growth within his loyal client base, especially as they have spread out across the country. He and his team of accountants works closely with Kubhera provides comprehensive tax, providing a “One Stop Shop” for tax planning, strategy development and implementation, tax filing, and much more.
Prior to starting his own CPA firm, Ganga was the Senior Accountant/Supervisor at Price Waterhouse Coopers and at Deloitte and Touche where he spent 7 years in the Audit departments. Ganga graduated from Queens college with an undergraduate degree in Accounting and Economics, received his CPA, and in 1986 attended the Harvard Business School in a specialized program designed for the Big 4 accounting firms.
Along with an active CPA practice and being a Partner at Kubhera, Ganga serves on the Board of Advisors for Heart and Hand for the Handicapped, a grassroots organization in the NY/NJ/CT Tri-State area, which raises funds for handicapped children.