Investor's Playbook

📖Today’s Agenda

• Stock Market : The Federal Reserve's Core Inflation Measure Dips Below 2%

• Entrepreneurship : TOP 3 AI TOOLS OF THE WEEK

• Personal Finance : 3 Important Tax-Saving Tips For Year's End

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📈Stock Market

The Federal Reserve's Core Inflation Measure Dips Below 2%

The Federal Reserve's primary inflation rate, the core PCE price index, showed that core price pressures continued to cool more than expected in November. Core inflation has run at just a 1.9% annualized rate over the past six months, Commerce Department data show. S&P 500 futures pointed higher.

The fall in inflation to the Fed's 2% target on an annualized basis while unemployment remains below 4% and economic growth has been solid helps explain why policymakers are beginning to worry less about an inflation resurgence.

November PCE Inflation Rate

The personal consumption expenditures, or PCE, price index fell 0.1% in November, matching forecasts. The annual headline inflation rate fell to 2.6%, below 2.9% estimates that came before downward revisions to prior inflation data.

Typically, Federal Reserve decision-making puts more weight on core inflation, which strips out volatile food and energy prices. The core PCE price index rose 0.1% in November — actually 0.06% unrounded — cooler than 0.2% forecasts.

The core 12-month inflation rate eased to 3.2%, below Wall Street expectations of 3.4%.

Federal Reserve chair Jerome Powell has said policymakers wanted to see six months of tame inflation data to be sure that the disinflationary trend isn't fleeting. On a six-month basis, PCE inflation is running at a 2% annualized rate, while core PCE inflation has fallen just below the Fed's 2% inflation target.

Fed Rate Cut Odds Grow

After the November PCE report, market pricing showed 86% odds that the first rate cut will come at the March 20 meeting, up from 79% on Wednesday. Markets now see 48% odds of 1.75 percentage points in rate cuts next year, up from 38% before revisions to prior inflation data were published on Thursday with the latest estimate of Q3 GDP growth.

While the Fed penciled in 75 basis points in rate cuts for 2024 in its latest projections, markets have been pricing in twice as much, and they're getting closer to pricing in another quarter-point reduction.

The rapid ebbing of inflation is making the current 5.25% to 5.5% range of the federal funds rate look increasingly restrictive.

The degree of Fed monetary policy tightness reflects the real federal funds rate, meaning how much its key interest rate exceeds the inflation rate. In Q3, the real federal funds rate was between 3.25% and 3.5%. That compares to the Fed's long-term estimate of the neutral policy rate as 0.5% above its 2% inflation target. The neutral rate is one that neither restricts growth nor boosts it.

Supercore Inflation

Starting late in 2022, Federal Reserve chair Powell shifted the inflation focus to core PCE services excluding housing, or supercore services. That was in keeping with the Fed's view that the tight labor market and elevated wage growth had been at the root of stubbornly high inflation. Wages make up a high percentage of costs for service businesses. Therefore, supercore services inflation should ease as wage pressures moderate.

Prices for these core nonhousing services, including health care, haircuts and hospitality, rose just 0.12% for a second straight month in November. The 12-month supercore services inflation rate eased to 3.5% from 3.8% in October and 4.1% in September.

That should reinforce that the disinflationary trend is broad-based, giving assurance to the Fed that a snapback in price pressures is unlikely.

🎯Entrepreneurship

TOP 3 AI TOOLS OF THE WEEK

1. Stylized

IMAGE GENERATOR / MARKETING

Stylized's advanced AI technology can be used for a variety of projects including branded content, e-commerce, fashion, photography, and social media. This handy tool makes it easier than ever to showcase your product and put your own unique stamp on any project. With Stylized, you'll be able to create stunning visuals that will captivate viewers and help generate more interest in your product. Whether you're a professional or amateur graphic designer, Stylized has something for everyone.

2. ContentBot.ai

TEXT GENERATOR

ContentBot.ai can be used in a variety of ways, from Copywriting to SEO, Social Media to Education, Teaching and more. Whether you need to write daily or weekly blog posts, automated tweets, or quickly generate 500 blog post topics, ContentBot.ai makes it possible to simplify your entire content plan by automating the tedious tasks in the background. Try it out today to see what AI content automation at its best has in store for you!

3. Success.ai

COLD EMAILING

Success.ai is an ideal solution for marketing/communication, sales, Marketplace, and e-commerce operations. Leverage this B2B powerhouse to unlock and analyze data for faster, more accurate decision-making. With an intuitive interface, AI-driven capabilities, and access to 700 million+ verified leads, it’s never been easier to supercharge your outreach and LAUNCH your success. Start a free trial today to transform your lead generation and email marketing.

💸Personal Finance

3 Important Tax-Saving Tips For Year's End

The end of the year is an excellent time for families to take an honest look at how their finances panned out over the previous 12 months, all while asking themselves if they are where they hoped to be. This is true whether people are trying to pay off debt to get themselves in a better financial situation or whether they're in a wealth accumulation phase and on their way to an early retirement. With an entire year of data to pore over, individuals can get an idea of what they earned, where their money went, and steps they could take to improve their financial picture after the clock turns midnight on New Year's Eve.

Until that time comes, however, there are several essential tax savings moves and general financing strategies consumers should consider. Some tax savings tips still within reach this year have to do with charitable giving or getting organized, whereas others aim to help consumers avoid financial waste.

Which tax savings tips should you consider before year's end? Here are three strategies you can add to your to-do list:

1. Tax-Loss Harvesting

Financial advisor Eric Bronnenkant of Betterment says that investors can consider tax-loss harvesting if they want to use losses to lower their tax bills strategically. However, taxpayers considering this move should be aware of the IRS' wash sale rule that prohibits claiming a loss on a “substantially identical” investment bought within 30 days of the sale.

"The goal is to make your replacement investment as different as possible to avoid the wash sale rule, but also ensure that it aligns with your overall investment goals and risk tolerance," he said.

While investors can assess their portfolio and try out tax loss harvesting strategies on their own, it's worth noting that Betterment and some other robo-advisor platforms offer this service within their paid investment management plans.

2. Review Your Tax Withholding

Bronnenkant also says that taxpayers (especially freelancers and those with side hustles) should take the time to review their withholding and estimated tax payments before year’s end.

Ensuring you meet the IRS “safe harbor” requirements by paying at least 90% to 110% of your prior year's tax or 100% of this year's tax can help avoid penalties and fees. Meanwhile, timely adjustment of withholdings, like those from an IRA or a 401(k), can offset potential interest charges for underpayment, he said.

3. Get Organized

Financial advisor Jennifer Kirby of Talisman Wealth Advisors also points out that getting organized now can lead to a lower tax bill due in 2024. For example, you should take steps to find and organize receipts, invoices, and relevant documents to streamline the tax-filing process.

"Organized records make it easier to identify potential deductions and credits," she said.

This is true whether you plan to file taxes on your own or you opt to use a professional tax service. In either scenario, preparing now can help you avoid being frazzled and overlooking important tax paperwork if you wind up having to file close to the tax deadline in 2024, which is Monday, April 15.

Bottom Line

There's not much time left in 2023 to get your financial ducks in a row or ensure you're doing all you can to save on taxes, but you still have a few precious weeks left. This may be enough time to boost contributions to accounts to help lower your taxable income, or to make charitable contributions to organizations or even the people you love.

Whatever you do, don't head into 2024 without at least thinking over your financial health and tax plans, and the steps you can take to improve them.