The Fed Hikes Rates Four Times In 2023 – Bond Market Overview

The Federal Reserve raised rates eleven times between 2023 and 2022, increasing the Fed Funds rate from 0% at the beginning of 2022 to 5.5% at the end of 2023. Expectations are that the Fed will begin easing rates in 2024, reversing its tightening monetary policy. Lower consumer and mortgage rates are expected to materialize as the Fed eases.

Fed influenced rate reductions among other central banks globally is creating a lower rate scenario in 2024. The European Central Bank (ECB) as well as the central banks of Canada and England signaled a continued easing of rate policy in 2024.

A unique dynamic started to occur in the 4th quarter of 2023, with Treasury yields and commodity prices falling in tandem.  In any event, the yield on the 10-year Treasury bond ended 2023 at 3.88%, down from 4.95% earlier in October.

Sources: Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FEDFUNDS

Stocks Finish 2023 On A Positive Note – Global Equity Review

Major global equity indices experienced a reversal in performance towards the end of 2023 relative to earlier in the year. Domestic indices including the Dow Jones Industrial Index and the S&P 500 Index, finished the year positively, along with international indices including the Japanese Nikkei 225 and the German DAX.

As mentioned earlier, seven stocks accounted for roughly half of the return for the S&P 500 Index in 2023. Such a disparity can distort the actual representation of the index, with only seven stocks representing such a large portion of returns relative to the other 493 stocks within the index. Information technology stocks contributed the most to the performance of the S&P 500 Index, accounting for approximately half of the indices’ return in 2023. Seventy-one percent of the S&P 500 Index rose less than the index itself in 2023, a disconnect from the top seven. It was the first time since 2012 that the S&P 500 Index failed to close at a record high at least once during the year. The index closed at its current record high in January 2022.

Sources: S&P, Bloomberg, Reuters, https://fred.stlouisfed.org/series/SP500

U.S. Oil Production Reaches Another Record – Commodity Sector Overview

Despite efforts to curtail oil consumption and production of domestic oil, the U.S. achieved another record producing year in 2023. With over 13 million barrels of oil produced per day, the U.S. continues to be the worlds largest producer, eclipsing Russia and Saudi Arabia as a distant second and third. The United States has ranked as the world’s top oil producer since 2018.

The U.S. shale industry, known for its fracking technology to extract oil from shale rock formations, has continued to surprise the world oil markets with its resistance to varying prices. U.S. drillers have thus far been able to beat Saudi Arabia’s “pump and dump” strategy over the past few years to lower oil prices in order to maintain market share.

Global demand for oil has been steadily increasing for the past two decades, with a slight pullback during the pandemic in 2020. The broadening demand has been from both developed and emerging economies, as the reliance on crude oil and gasoline remains intact worldwide. The United States has become one of the top five exporting oil countries, with over 10 million barrels exported each month, representing two thirds of total U.S. production (Source: U.S. Energy Information Administration; U.S. Field Production of Crude Oil)

Global Tax Rates On The Rise – Global Tax Policy

Governments worldwide rely on tax revenue in order to fund government expenses and operations. Tax policies and initiatives vary from country to country depending on the economic prosperity and health of the country’s economy. Developed countries tend have more comprehensive and structured tax policies in place, relative to emerging market countries.

The recent rise in interest rates worldwide has led to a higher cost of governments issuing debt, thus prompting governments to instead resort to raising taxes. France, Japan and South Korea are among countries with increasing tax revenue in lieu of issuing additional government debt. Certain developed economies are also seeing an increase in labor force participating rates, including France, Germany, Italy, and Japan. Increasing participating rates tend to increase tax revenues as more workers add to the tax revenue base. (Sources: OECD; Tax On Personal Income Publication)

Emergency Supply of Meds?

In the past I have written about keeping an emergency supply of food, water, and energy.  But keeping an emergency supply of antibiotics is also vital, especially since the U.S. has limited antibiotic production capabilities. China controls about 90% of the global supply of antibiotic productions, posing a risk of limited access in emergencies.

Enter in Jase Medical, an online service founded by Shawn Rowland, M.D., that offers a telemedicine service for U.S. and Canadian adults to get antibiotics (and other daily medicines) for travel or emergencies. The process is straightforward, taking about 5-8 minutes. You’ll need your current medication list, dosages, purposes, and a photo ID for the consultation.

Jase Medical offers many customizable options, but one is the Jase Case where customers receive 5 types of antibiotics, a case, and a guide booklet. According to their website, the 5 antibiotics are as follows:

• Amoxicillin – Clavulanate 875-125mg (Augmentin) – 28 tablets. Augmentin can be used to treat multiple types of infections like skin, sinus, throat and dental infections, urinary tract infections, pneumonia, bite wounds, and intra-abdominal infections.
• Azithromycin 250mg – pack of 6 tablets. Azithromycin is a common antibiotic often used when someone has a penicillin allergy. Frequently used to treat respiratory infections, ear and throat infections, infectious diarrhea, some sexually transmitted diseases, and typhoid fever.
• Ciprofloxacin 500mg – 28 tablets. Cipro can be used to treat a variety of ailments like urinary tract infections, kidney infections, prostatitis, bone and joint infections, infectious diarrhea, intra-abdominal infections, bioterrorism infections (like anthrax and plague), typhoid fever, meningitis, and more.
• Doxycycline 100mg – 120 tablets. Doxy is a common antibiotic that can be used to treat many conditions including skin and soft tissue infections, ear and sinus infections, pneumonia, bioterrorism infections (like anthrax, plague, and tularemia), malaria, lyme disease and more. This antibiotic has been shown to treat MRSA, or methyl-resistant staph aureus.
• Metronidazole 500mg – 30 tablets. Metronidazole can be used for a number of conditions including amoebas, skin infections, intra-abdominal infections, C. diff diarrhea, and tetanus.